From Red Bull to Big Red: Beverage industry veteran talks energy, classic soda and why Sparkling Ice should inspire us all

By Elaine WATSON

- Last updated on GMT

Related tags Red bull Soft drink

The energy drinks market has become more segmented in recent years, but relentlessly negative PR, a flurry of lawsuits and an FDA-probe have not dampened consumers’ enthusiasm for the original caffeine-fuelled formulas, says one beverage industry veteran.

While SKUs have proliferated, the flagship products that first attracted consumers to the category are still driving its growth, says former Red Bull COO Gary Smith, who left the energy drinks giant in 2007 to take the helm at leading beverages distributor Big Red.

“Retailers are making space for innovative new products, and if a big player like PepsiCo brings out something with all-natural energy ingredients ​[click HERE​] that is a success, then others will follow, but there is no brand out there right now on an all-natural energy platform that’s as big as Monster or Red Bull,” ​said Smith.

“The core products are still driving the growth and you only have to look at the space allocation​ [which is generally based on what is selling], to see that.”

And while trend-watchers say consumers are looking for more ‘natural’ ways to get energy, “the data speaks for itself​,” said Smith, who was talking to FoodNavigator-USA following the publication of Nielsen data showing that US retail volumes of energy drinks* surged 10.5% in the four weeks to March 15, driven by a solid performance from Red Bull and strong growth from the core Monster Green products, which continue to outpace company-wide growth.

“Even at an early stage, we all believed the energy drinks market would morph into hybrids - juice, tea, coffee and so on, and they have captured some market share,” ​said Smith.

“But the core products like Monster and Red Bull have held their ground​.”

Classic soda brands such as Big Red are still attracting new consumers

But what about the broader trends in the beverages market? Are carbonated soft drinks in a death spiral, and why are diet soda sales going backwards?

While some commentators argue that flagging sales of Diet Coke and Diet Pepsi reflect consumer concerns about artificial sweeteners; the phenomenal success of Sparkling Ice​ - a diet soda which is arguably equally ‘artificial’ (it’s sweetened with sucralose, contains artificial colors and preservatives, and does not feature any exotic ‘natural’ ingredients) - suggests there might be more to it, he said.

At the very least it shows you don’t have​ to be ‘all-natural’ to make it in the soft drinks aisle, he pointed out.

And as for fizzy drinks, while there has been an enormous amount of health-focused innovation in the still beverages market in recent years - from coconut water, acai juice and chia drinks to kombucha - classic soda brands such as Big Red are still attracting new consumers, he said.

Indeed, Big Red, which has been around since 1937, notched up sales growth of 16.5% last year and 13% the year before, he said, and is still growing nicely in new territories including Alaska and Hawaii as well as core markets in Texas, Kentucky, Florida, southern Indiana, and southern California.

There is nothing revolutionary about Sparkling Ice, but look how fast it is growing

And as for innovation, while everyone wants to come up with genuinely groundbreaking new products, the success of brands like Sparkling Ice also proves that you don’t necessarily have to come up with something radically new to succeed, he added.

In fact, you might be sitting on a brand that already has all the right ingredients for success - but just needs to be refreshed, revamped or re-positioned to unlock its true potential, he pointed out.

Take HYDRIVE, which had been ticking along since its launch in 2006 but not setting the world on fire.

Big Red, which acquired the brand in 2012, added the words ‘energy water’ to its name and refreshed its packaging and marketing, and is already seeing impressive results, said Smith (click HERE​ to read our interview with Smith’s colleague Thomas Oh).

“There is nothing revolutionary about Sparkling Ice, but look how fast it is growing. That brand had been around for a while, it was refreshed, and it just took off. We’re hoping we can do the same with HYDRIVE.”

*The data is from a Wells Fargo note published on April 1 analyzing Nielsen scanner data covering sales of energy drinks in US food, drug, mass merchandise, club stores, dollar stores, military stores (xAOC) and convenience stores in the 4 weeks to March 15, 2014.

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