Does the energy shot market have room for a new player?
The entrepreneurial veterans – Dennis Wynant and Doyle Schaefers – are on a mission to capture 5-7 percent of the market (which has grown from zero to $1bn+ in retail sales in just six years) within four to six years with On Point Energy shots.
Energy to engage – and expand?
And if the khaki-clad zero-calorie shots – launched last month in southern California with the motto ‘energy to engage’ - take off, they may also expand the brand into other “fast, convenient energy supplement products”, Wynant told FoodNavigator-USA.
“We’ve talked about extending the On Point Energy brand, and energy bars or energy pill supplements would definitely be consistent with it. But do I see us moving into the 8oz or 16oz beverage category? No.”
The target audience is the military, people that support the military, and outdoor enthusiasts, he said.
However, what really makes On Point Energy stand out from the crowd is the fact that Wynant and Schaefers plan to give away 40 cents out of every dollar they make.
20 percent of net profits will go to charitable organizations that support troops and their families, while an additional 20 percent will go to a venture fund that assists start up businesses, particularly those set up by veterans.
The formula: It really comes down to brand loyalty
While On Point Energy had more B vitamins and a “slightly different energy blend” than market leader 5-hour Energy, claimed Wynant, most shots contained a similar mix of B vitamins, herbs and enzymes, he conceded.
“There are subtle differences between the products; we’ve done some taste testing and people also say ours is stronger, but it really comes down to brand loyalty. We are trying to find a niche in the market.”
He added: “We don’t want to be a me-too brand. I think Red Bull was right to exit the market. I don’t think any company – even Red Bull – can succeed if they just do a me-too. It was always a half-hearted effort on their part.”
Passion, energy shots, and Oprah Winfrey …
While “100lb gorilla” 5-hour Energy had hoovered up almost 80 percent of the market, there was room for another player provided it positioned itself differently, said Wynant, who had originally planned to bring a shot called ‘Cram’ to market.
Cram, which was targeted at college kids seeking to burn the candle at both ends, was almost ready to launch when Wynant suddenly changed course in January, he revealed.
“We’d worked with a manufacturer on the formula, got the logos and the bottle design ready and the marketing strategy all worked out - we were just weeks away from flipping the switch - and then we realized Cram just didn’t make sense.”
The Eureka moment came while watching an episode of Oprah featuring Michelle Obama, Bob Woodward and Tom Brokaw about the sacrifices made by the armed forces, he said.
“Literally at that moment, I called my business partner and said we’ve got to change the product. We didn’t understand the college market; it was not what we were about, whereas 18 members of my family served in the military. We are military guys and former Marines and that’s what we are passionate about.”
The launch and roll-out
The On Point Energy shot (recommended retail price $2.99) is currently available in convenience stores in southern California, but the firm is also talking to chains such as Big 5 (sporting goods), Kangaroo Express (which has 850+ stores within a 25-mile radius of a military installation) and some national convenience store chains about listings following strong initial feedback and favorable press coverage, said Wynant.
On Point’s name derives from the military term ‘riding point’, which refers to men scouting ahead. Today, it is used to describe someone that takes charge of a project or situation.
How much room is there in the energy shot market?
In a conference call with analysts earlier this month, Hansen Natural Corporation – which owns Worx Energy shots and Monster Energy drinks - said there was room in the market for “a good competitor to 5-Hour Energy”.
Chief executive Roger Sacks said: “The margins are good, and so we believe there are still good and valid reasons for us to persist in trying to find the formula that will work to be a credible competitor in that category.”
While there was some crossover, consumers of energy shots and drinks were discrete groups, he claimed: “We believe there is a different consumer that is the principal consumer of energy shots, as opposed to energy drinks."
