It’s Hard To Handle Hardcore Energy
In nearly every respect, it was a rosy year for energy drinks. Salesfi
remained high, the category continued to expand, and a parade offi
new drinks and hybrids found their way to market.
Despite their youth, energy drinks have become as mainstream a partfi
of the beverage economy as any other product. Rockstar sales reps holdfi
tastings in corporate cafeterias; Monster is marketing a coffee/energyfi
hybrid; Pimp Juice is hyping its antioxidant content. Projections showfi
the category could hit $10 billion by 2010.
Things should continue to go well. If, that is, consumers can stay outfi
of the emergency room. Because last year brought some of the worstfi
headlines the category has seen to date. A pair of well-documented healthfi
scares – and a product named for an addictive street drug – brought afi
deeper, panicked level of scrutiny to the manufacture and marketingfi
of energy drinks. At a time when Americans’ concerns about caffeinefi
consumption are growing and functional beverages and foods are undergoingfi
government review, it may be that the future of the energy drinkfi
category is hazier than it appears.
What’s causing the negative attention? In the past year, it’s been a triofi
of energy drinks whose pumped-up caffeine content (more than 30 mgfi
per fluid ounce – between three and four times that of a typical energyfi
drink) has led some industry members to assess them as a new segmentfi
– Extreme. Two of the products, Spike Shooter and Redline, are madefi
by nutritional supplement companies. Both caused national headlinesfi
when, after drinking them, consumers were hospitalized with symptomsfi
resembling caffeine overdoses. A third drink, Cocaine, caused a tempestfi
in a slim can due to its inflammatory name.
As a result, the image of energy drinks – always more motocrossfi
than merry-go-round – has sustained some damage. And the possibilityfi
of another acute reaction – or another wave of bad press – is causingfi
some industry observers to look with concern at the extreme end offi
the energy spectrum.
“We talk about it a lot,” said James Foster, who runs thefi
Web site EnergyFiend.com, which tracks caffeine in beveragesfi
and has become a resource for consumers and thefi
media. “All there needs is one bad accident to happen, justfi
one event where someone gets damaged, and the whole categoryfi
is going to come under scrutiny in a negative way.”
Regulation, Inside and Out
This spring, a group of beverage marketing executivesfi
gathered in the offices of the American Beverage Associationfi
(ABA), the first members of a new committee onfi
energy drinks. Caffeine concerns were of paramount importance,fi
according to Kevin Keane, the ABA’s Vice Presidentfi
of Communications.
“It’s a growing category, and we need to be smarter withfi
those issues,” Keane said, adding that caffeine “was the bigfi
thing we were dealing with.”
The end result of the meeting was a recommendation that ABAfi
members begin disclosing caffeine content voluntarily, which echoedfi
choices by the Coca-Cola Co. and PepsiCo to start divulging the caffeinefi
content of their products.
The recommendation wasn’t made with any of the extremefi
products in mind – none of their manufacturers arefi
ABA members. But the ABA has a long history of fightingfi
back against regulation, taking on criticism of the use offi
High-Fructose Corn Syrup and sodas in schools with equalfi
aplomb. That the group recommended caffeine disclosurefi
for its energy drink making members so quickly indicatesfi
its awareness of the potential for a public relations debacle.
“Our industry sent a message, in the way they approvedfi
this voluntary labeling and put the issue front and center,”fi
Keane said.
As for extreme products, he added, the jury is still out.
“It’s something that people are aware of, but concernfi
hasn’t reached a high level yet,” he said. “The consumers arefi
making their judgment with regard to them. It’s such a newfi
category, it’s still growing, and everyone’s seeing how thingsfi
are going to progress. And you don’t want to overreact tofi
things, either. I mean, it’s an energy drink.”
Spiking the Headlines
Keane’s right: Most energy drink consumers are aware that caffeine (andfi
analogous products like guarana and yerba mate) is their “energy source.”fi
It’s also quite likely that a group of Doherty High School students in Coloradofi
Springs, Colo. were aware of the high levels of caffeinefi
in Spike Shooter when they started buying it at a nearbyfi
7-Eleven, particularly since there’s a pretty big warning labelfi
across the top along with (just like Redline) a recommendationfi
that first-time consumers try a half-can to start.
Nevertheless, after drinking Spike Shooter, a pair of thefi
students were taken to the hospital – one, infamously, leftfi
school in a wheelchair. Many more complained of alarmingfi
reactions like vomiting and heart palpitations. The falloutfi
for the company was immediate, as the media, includingfi
CNN, descended on the school and began looking at energyfi
drinks with a more jaundiced eye.
Surprisingly, since the story broke, rather than scaringfi
consumers off, Spike Shooter’s sales seem to have increased.
“We’ve had some pretty unbelievable experiences alreadyfi
with the media, and we know any little thing can become afi
major ordeal,” said Greg Guss, Spike Shooter’s Vice Presidentfi
of Marketing. “We’re doing whatever we can to avoidfi
that. When we do sampling, we card anyone who isn’t 18.fi
Beyond that, we can’t prevent people from abusing thefi
product.”
Spike Shooter is manufactured by Biotest, a nutritionalfi
supplement manufacturer whose products typically sellfi
in GNC or Vitamin Shoppe. The RTD product was introducedfi
in those channels, but last year began a periodfi
of rapid growth through convenience stores. Recently,fi
Spike Shooter was approved by Haralambos Beverage Co.,fi
a major Southern California distributor, and, despite thefi
incident in Colorado Springs, it is apparently on trackfi
to wrangle more shelf space in 7-Eleven, as well. Not thatfi
there aren’t concerns.
“We’re going very, very slowly,” said Raj Singh, the beverage buyer forfi
7-Eleven’s 840-store Central Region. “In Colorado, there are some storesfi
selling $40 or $50 worth of products a day. We’re not going to be very aggressive,fi
but we don’t want to miss that opportunity.”
Singh confirmed that the product is spreading in hisfi
Colorado stores, and that, starting in Las Vegas, 7-Eleven isfi
looking into the possibility of carrying Spike Shooter on anfi
even wider basis. But he is still leery.
“We have a little bit of concern,” he said. “There are thefi
stories that all of the caffeine seems to make the kids hyper.”
Hyper is one thing. But emergency room visits are a biggerfi
problem, according to Foster. He believes that mostfi
consumers – and media – won’t make the distinction betweenfi
hardcore products and regular energy drinks if anotherfi
incident takes place.
“If they’re marketed the same way, they’ll all be tarredfi
with the same brush,” Parker said. “It’ll affect the whole category,fi
surely. You don’t want hysterical media coming out.”
Playing to Hysterics
Hysteria was certainly on software developer Jamey Kirby’sfi
mind when he decided to make an extreme energy drink of his own.fi
His tech background made him want to name his product “Downloadfi
Energy,” but when that was already registered elsewhere, he decided tofi
go for broke.
He called it “Cocaine.”
“The more you think about it, it’s the ultimate name for an energyfi
drink,” Kirby said. “Because it’s rebellious and irreverent,fi
the core market for energy drinks would go crazy about it.fi
We figured it would be a great name, and a lot of peoplefi
would buy the drink. It was a limited demographic, but wefi
figured the market would make up its mind.”
Kirby said the market response was huge – he estimatesfi
he shipped 200,000 cases and had 50,000 more ordered infi
the first weeks that the product received publicity. But thefi
tide of public opinion quickly turned.
“We were prepared to get beat up,” he said. “And we gotfi
free publicity – I don’t think we spent more than $15,000fi
on advertising. But we never, ever expected the backlash.”
Politicians and parents demanded Cocaine be removedfi from shelves,
and the company recalled its remaining cans, twice re-labeling them.
Now, Kirby is selling “No Name Energy” (write infi your own name!)
domestically while he markets Cocaine in Europe.
The backlash over Cocaine was a much bigger concern than caffeine tofi
mainstream beverage marketers, according to Keane.
“We don’t hear from members about the risks of caffeine so much as somefi
of the marketing practices,” he said. “People know what they’re buying whenfi
they buy energy drinks. But it’s some of the names that seem to cross the linefi
of acceptability with the consumer. Cocaine obviously didn’t work.”
Still, it’s not as if mainstream energy drinks don’t already push thefi
edge of taste as it is. Most energy drinks, in fact, carry tough-sounding orfi
obscene names, and many also carry hyperbolic warnings of their own.fi
The image that helped the category grow, Keane admits, might havefi
created a situation where it is hard to separate the areas of real concernfi
from the hype.
“As with all of the products, a lot of it is marketing,” he said.
According to Foster, problems arise when, in a forest of extremesoundingfi
drinks, the ones that actually have extra potency don’t seem tofi
be any different from those that don’t. While Cocaine challenged peoplefi
with its name, there wasn’t much discussion of its potency as compared tofi
other drinks – even though it was one of the strongest around. Similarly,fi
Spike Shooter and Redline are expected by their manufacturers to be merchandisedfi
in the energy drink cooler, right next to Red Bull, despite thefi
difference in kick.
Redline, for example, has chemicals added that add a fat-burning, “thermogenicfi
shiver” effect to its potent level of caffeine. With its rounded topfi
and an appearance that makes it look a little less like a traditional energyfi
drink, it might seem geared to a different niche.
But not according to Redline’s CEO, Jack Owoc, who noted, whenfi
interviewed by electronic mail, that the best place for mainstream retailersfi
to sell his products is “in coolers and on shelves (end caps would be better!)fi
next to other energy drinks.”
Spike Shooter also attempts to identify itself as both a product thatfi
is specifically designed to help athletes work out better, and as a mainstreamfi
energy drink, as well.
“We design a lot of products for elite level athletes,” Guss said. “Nofi
one wants to drink 24 ounces of something before an elite level workout.fi
(Ultimate Fighting Champion) Randy Couture wouldn’t do thatfi
before he works out.”
“But,” Guss added, “It’s also a great mixer. The reason we created Spikefi
is that we believe traditional energy drinks didn’t deliver on their promise.fi
If you want to call Spike ‘hardcore,’ we’ll call it hardcore, but this is whatfi
energy drinks should have been all along.”
It’s that split personality – how many elite level athletes prep for theirfi
workouts at 7-Eleven? – that might undermine the entire category.
“You can provide all the warnings you want, but it comes down again tofi
a marketing issue,” Foster said. “If these things are marketed as a standardfi
energy drink, they’re going to have a problem. 14-year-olds, they’ll justfi
scarf them down.”
Over-Caffeinated Complaining?
Given caffeine’s established place in American culture, concerns about excessivefi
caffeine in any drink can sound overblown. It’s not as if consumersfi
are strangers to the product: worldwide, there are more than 13,000fi
Starbuck’s franchises doling out their own, particularly high-test brand offi
coffee. Starbucks can reach 23 mg per fluid ounce.
As one mainstream energy drink executive puts it, he’s sick of “thefi
mother who’s saying that she’d never let her son or daughter drink somethingfi
like [an extreme energy drink] when she’s on her third latte.”
And despite publicity surrounding bad reactions to the high levelsfi
of caffeine in energy drinks, it takes a near-undrinkable amount to causefi
a fatality. In the vast majority of well-publicized but non-fatal caffeinefi
overdoses nationwide (six incidents in California related directly to Redline’sfi
RTD product notwithstanding), the culprits were caffeine pills,fi
rather than beverages.
But extreme products are influential, and there’s something of an armsfi
race going on. One mainstream brand, Wired Energy aims its X344 andfi
X505, with 178 mg of caffeine per 8 oz. serving, at serious caffeine junkies.fi
Meanwhile, BooKoo, a fast-growing brand, has a line of 5.75 oz. “energyfi
shots” with about 120 mg of concentrated caffeine. Even Coke now ownsfi
NOS, which packs 173 mg of caffeine into an 11 oz. bottle.
It has the potential to become a larger issue because, prior to the morefi
extreme products, energy drinks’ caffeine content never really matchedfi
their sales rhetoric. Until now.
For a long time, even if they aren’t particularly “amped” with extra caffeine,fi
the vast majority of energy drink brands tried to appear that way,fi
in name and image, almost universally daring their consumers to “slam”fi
them. That attitude helped the category growth.
But in a marketing environment like that, with a Monster or a Kronikfi
or a Full Throttle in your sights, it’s easy to see why going hardcore, regardlessfi
of the potential pitfalls is tempting for manufacturers.
“We were following the trend in the energy drink business,” saysfi
Kirby, from the offices of Cocaine energy. “There were edgy drinks, therefi
were already drug names, so we said, ‘Hey, let’s take it all the wayfi
to the top.’”