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2 local drink companies looking to energize a $6 billion market

Energy-drink marketing, from the bottom of snowboards to nutty prank campaigns, fuels a $6 billion industry of virtually indistinguishable caffeine-laden beverages.

So newcomers to the energy drink market find themselves targeting increasingly narrow groups to gain traction in a market which already has some big players.

"There's this aspect of consumer culture that clamors for new packaging and new combinations of old things," said Jeffrey Klineman, editor of BevNET, a beverage industry website.

An industry that did not exist 30 years ago now has brands so specifically focused that they are marketing to fans of certain types of athletics, Klineman said.

Two local companies, targeting health-conscious energy-drink consumers, are looking to carve out part of that market.

Enertia Beverage's Vital Energy, and Green and Company's Pure Energy are trying to become household names through very different strategies.

Vital Energy, based in Rochester and made in Dunkirk, is aiming for the mass-media limelight. The company created buzz around its brand by focusing on pranks, gaining exposure on MTV, VH1 and YouTube.

"We like to joke around, we like to tease each other," said Enertia Beverage CEO Michael Joseph. "We couldn't have paid millions of dollars to get features on TV shows, so it's more cost-effective."

And more fun.

The two-year-old company was originally based out of Joseph's parents' basement. The first video prank to go viral shows Joseph's parents shocked reaction when they come home from vacation to find the walls of their house lined with more than 25,000 energy drinks.

His mother goes into a hysterical tantrum.

"I'd been living with my parents at the time and we'd been working out of my house for eight months," Joseph said. "It got us a lot of publicity."

It also got Joseph kicked out of the house -- for the night.

> Viral marketing

The group isn't done pulling pranks. Last fall they built a snowman in Niagara Square and gave away drinks, and Joseph said the group may have another prank planned for Buffalo this summer. So far they have kept it low key, attending events like the Buffalo Marathon and the Corporate Challenge to pass out their drinks.

Vital Energy's social media-oriented strategy allows them to target consumers more directly than a traditional media campaign might allow, said Paul Richardson, a marketing professor at Niagara University.

"Viral marketing, using social media, has an advantage that you can market not only using demographic variables, but also attitudes, interests and opinions," he said. "It'd be very hard to find a magazine that fits that precise demographic."

Vital Energy's videos are a perfect example of viral marketing, Richardson said. They say very little about the product but are designed for social consumption.

Enertia Beverage recently signed with manufacturer Cott Beverages to have their drinks made in Dunkirk. Vital Energy is available in much of Western New York, from Buffalo to Auburn, Joseph said.

The demand for energy drinks is expected to keep growing, Klineman said.

> Strategies differ

The barriers to entry in the energy-drink markets make it easy to start a small brand but extremely difficult to take it to the national level, Klineman said. Many of the distribution channels have agreements with already popular brands that do not allow competitors.

"The reason a lot of people keep getting in is because it's easy to find someone to make this stuff for you," he said. "Although the market has matured, there are still lots of converts [first time energy drink buyers]."

Energy drinks have always been about image, Klineman said. When Red Bull first came out it rode the wave of the late-night party scene and extreme sports, becoming synonymous with some of the events.

Later market entries, like Monster, carved out a niche with small differences, like a larger can promising more caffeine, Klineman said.

"They basically had a big enough field they could offer some basic variations," he said. "It's good marking, it's identification of consumer needs people want what they're drinking to do a little bit more than it did before."

Green and Company, based in Buffalo, is reaching out to demographics it feels have been ignored by energy-drink companies with Pure Energy, said Garrett Green, owner and CEO.

"Your typical energy-drink market is ages 16 to 24 or 25 heterosexual male," Green said. "This market has been very well cornered."

Pure Energy is marketed to women, fashion conscious metrosexual men, and gay men, Green said. This group is more health conscious, he said, and still interested in drinking caffeine.

To reach this market, Pure Energy started as a no sugar, no calorie energy drink that isn't promoted by the usual stream of rock stars and extreme athletes, Green said.

Rather than using "pull" marketing, where consumers demand stores carry the product, Green is reaching out to companies, explaining how his drink allows them to reach a previously untargeted market.

"The product is moving solely based on our packaging, solely based on what our brand communicates to the buyer," he said.

Richardson said Green's traditional marketing techniques, including lots of planning and market research, allow him more control over how his product is perceived.

"In traditional marketing you can either position a product as a very low price item (or a) very luxurious or premium brand for an exclusive segment," Richardson said.

Green said he wants his drink to reach a higher-end, more sophisticated customer.

"We put a lot of money into research, we put a lot of money into development," Green said. "Because we're willing to challenge the marketers that the energy-drink market is more diverse than they think it is, we face challenges."

Green has been overcoming those challenges and signed a contract with Kum & Go, a Midwest convenience store, in January. Pure Energy is now available in 11 states. It is bottled in New Jersey, California and Nevada.

> What's in them?

Most energy drinks are not any different than soda, said Peter Horvath, associate professor in the Department of Exercise and Nutritional Sciences at the University at Buffalo.

"These things are just really carbonated and uncarbonated sugar water," Horvath said.

Ingredients beyond the caffeine and sugar don't make much of a difference, Horvath said. Many of the vitamins, such as B vitamins or ginseng, are only helpful if you are deficient and you consume them more than once.

Even taurine, a staple of the energy-drink market, doesn't do much, he said.

"Most of us make all the taurine we need," Horvath said. "It just sounds good rather than having any real function."

They key component of energy drinks, caffeine, does make a difference.

Some studies say because energy drinks are consumed cold, the rate of consumption is faster and caffeine kicks in sooner than it would for a coffee drinker, Horvath said.

"Caffeine does help with exercise there are effects on heart rate and blood pressure and also some effects on metabolism," Horvath said.

But which drink someone selects will likely be due to the marketing behind it, not the ingredients.

e-mail: mtighe@buffnews.com