In a recent letter to shareholders, CEO Fouad Kallamni said the US company expected to announce new premium products in the sector before the end of Q4, ahead of launches in 2012.
At the start of December, New York-based Premier said it had reformulated its flagship premium energy drink brand OSO, to produce a product it claimed was wholly natural, and blended taurine, caffeine, guarana extract and cane sugar.
Kallamni said: “By being 100 per cent all natural in our category, we open the door to multiple opportunities to work with premium retailers who may have passed on traditional energy beverages in the past.”
Such high-end, organic retailers did not typically carry mainstream energy drinks, instead preferring green tea-based natural energy beverages, he added.
Kallamni said that Premier’s sales model involved the firm creating brands and manufacturing products, which it then sold to retailers under contract.
Said Kallamni: “With this strategy, we can receive excellent placement on the shelves, as the retailers are keen to push their store brands as much as possible.
He added: “We can effectively compete with the big three [Red Bull, Monster, Rockstar] with no marketing dollars, just a strong partnership with the retailer.”
Captive brand concept
As the “next generation” of private label, Kallamni said that so-called ‘captive brands’ allowed retailers to increase margin and unit yield of shelf space, given that they were increasingly looking towards private label to maximise revenue opportunities.
He said: “Consumers are also interested in saving money. The new generation of captive brands actually focuses, just like the major brands, on the principals of brand management and marketing.”
“The brands have character, great packaging, and are supported with sophisticated marketing and premium shelf-space, not to mention a quality product to back it all up.”
Over the last decade Kallamni said that during many trips to exclusive night venues in New York, he was struck by an anomaly whereby premium vodka bottles and specially designed glasses were paired with extreme energy drinks.
“Given the price of cocktails and the care taken to use fresh and natural ingredients, it became very clear that these energy drinks with unknown and artificial ingredients, not to mention their unpleasant aftertaste, were simply unacceptable for high-end quality drinks and the venues where they were being served,” he said.
This led to the development of Premier’s flagship brand OSO, Kallamni said, a premium energy drink that it sold to ‘high profile’ on premise accounts (hotels, restaurants, clubs) in New York.
The market for functional beverages – energy drinks, energy shots, enhanced waters – was worth $9.2bn (€6.97bn) in the US in 2008, according to according to Mintel statistics.
And noting substantial growth in the segment since 2004, Kallamni said that the functional beverage category had unearthed a consumer need that traditional beverages did not address.
He said: “We believe these beverages are quickly becoming the drink of choice for the younger generation, and have clearly moved out of ‘fad’ status into the mainstream market.
“We also believe the market will continue growing as these younger generations mature and new generations begin to consume these products,” he told shareholders.
Premier has just revealed pictures of its new glass bottle for the OSO brand (pictured) which it plans to launch alongside a new redesigned aluminum slimline can in Q1 of 2012.