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5-Hour Energy Drink


  5-Hour Energy
powered up
by Barry Silverstein
January 13, 2010

In a brutal brand marketplace littered with product failures, one category remains energized: New energy drink product launches increased more than 110 percent, and sales in that category rose by more than 240 percent, from 2004 to 2009, according to the research firm Mintel.

Energy drinks have captivated consumers with the promise of a quick burst of get-up-and-go, beginning where coffee leaves off.
 
 

Yet the problem with most energy drinks is that they are loaded with calories and sugar, which often results in a “crash” that occurs after the initial energy boost.

An unknown company called Living Essentials had a better idea. The company created a product that cuts the calories and sugar and instead relies on a blend of B-vitamins, amino acids and nutrients. They reduced the drink size from a typical 12 ounces to a compact 2-ounce “liquid energy shot” and packaged the product in tiny bottles that could sit on a store counter. Living Essentials claims the product provides an energy surge that starts in minutes, lasts for hours, and has no sugar crash associated with it.

When it came to naming the product, the company didn’t come up with anything clever or sexy: They called it “5-Hour Energy.” Manoj Bhargava, the founder of Living Essentials, recently told a conference audience, “You can tell from the name, we didn’t hire consultants to come up with it.” He added, “For us, anyway, the product is everything.”

Bhargava said Living Essentials first tested 5-Hour Energy at GNC, a chain of health stores that specializes in vitamin supplements. When the brand proved popular there, the company decided to move into more traditional retailers. But Bhargava knew 5-Hour Energy couldn’t compete directly with big brand names that owned a lot of space on beverage shelves or in refrigerated cases. So Living Essentials came up with a counter strategy: counter tops. They hired small distributors to peddle the product to convenience stores, encouraging them to put it on the counter next to lighters and key chains.

The downside of small distributors is that they typically don’t provide very accurate reporting, so to this day, Bhargava doesn’t really know how many stores carry the product. What Bhargava does know, however, is that 5-Hour Energy is now being sold at such major retailers as Dick’s Sporting Goods, The Home Depot, Kroger, and Wal-Mart. These stores have helped turn this unlikely product into a best-seller worth more than US$ 300 million last year. The brand has been so successful that it was named one of “America’s Hottest Brands” for 2009 by the magazine Ad Age.

Larger competitors took notice of “energy shots.” Brands including Arizona, Red Bull, and Monster have introduced their own energy shot products. They have a while to go to catch up, however; 5-Hour Energy controls about 70 percent of the market, according to Ad Age.

To maintain that leadership position, Living Essentials aggressively promotes 5-Hour Energy with a $60 million ad budget. But unlike most of its competitors, 5-Hour Energy targets working adults instead of teenage boys. “They’re the last people on earth that need more energy,” says Living Essentials creative director Carl Sperber in an interview with Ad Age.

That’s why 5-Hour Energy television commercials feature working adults and, increasingly, women – a demographic Living Essentials believes is under-served by energy drinks. The company also plans to make the product available at work sites via sampling.

Just like the product itself, 5-Hour Energy’s advertising is nothing fancy. The TV ads feature testimonials from real users. “It’s an old fashioned Procter & Gamble message,” Sperber tells Ad Age. “Here’s the product, here’s the features; here’s the benefits.”

5-Hour Energy’s online activities are also oriented towards features and benefits, but a campaign launched in December 2009 made a concerted effort to attract college students. In a tie-in with MAXIM magazine, college students and “energy drink fans” were invited to take the “Energy Drinks 401 Advanced Studies Final Exam,” an online Q&A testing their knowledge of energy drinks. Participants who completed the exam were entered in a contest to win a one-year supply of 5-Hour Energy. If they also filled out the “extra credit essay portion,” participants became eligible to appear in an upcoming TV commercial.

The opportunity for energy drinks in the college market is driven by students who want to stay alert when writing papers or studying for exams. 5-Hour Energy’s well-targeted “final exam” contest is more evidence that Living Essentials understands its potential audiences – and knows how to reach them.

 
     
  

Barry Silverstein has been a frequent brandchannel contributor since 2007. He has thirty years of advertising and marketing experience and is currently a freelance writer and marketing consultant. He founded and ran his own direct marketing agency and held executive positions with Epsilon, a leading database marketing firm and Arnold, a major ad agency. Silverstein is the author of three marketing books, including the McGraw-Hill book, The Breakaway Brand, which he co-authored with Arnold CEO Fran Kelly.

  
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5-Hour Energy - powered up
 
 Great review, Barry. And a great book, too!The concept of the energy drink, growing so wildly during the last year, is on the tip of a veritable avalanche of drinks over the last half decade. And more! Being a brand strategist and designer working in Japan, Korea and Indonesia, my curiosity perked on this more than a decade ago, given their profusion in these markets. Here's an added summary to explore. Interesting: energy...http://www.girvin.com/blog/?p=1266Tim Girvin | GIRVIN | Strategic BrandingSeattle|NYC|Tokyo http://www.girvin.com 
Tim Girvin, Principal, GIRVIN | Strategic Branding - January 16, 2010
 
 One of the other benefits of the distribution model 5 Hour Energy chose, convenience stores, is that it made it virtually impossible for the big retailers to roll out a private label version. PL has bedeviled many new products, especially in the herbal/supplement category. Spend a lot to brand your product and in six months you are rubbing elbows on the shelf with a cheaper Walgreens knock off. Not the case for this product. They did a great job of establishing the brand on several levels. 
Al Haberstroh, President, MontAd - January 18, 2010
 
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