X2 All Natural Energy Drink

Part
01
of eight
Part
01

Energy Drink Trends

Trends in the US energy drink space include Healthy Products and Product Distribution. The increasing popularity of energy drinks among athletes and millennial has seen an increase in the number of fitness facilities and hence, a change in product distribution.

1) HEALTHY PRODUCTS

  • According to Bevnet, "Consumer demand for products that contain less sugar and are made with natural ingredients is rising, as interest in drinks that can offer different functional benefits than typically seen in energy products."
  • Many brands in the energy drink space are either creating cross-functional products or adding natural ingredients like ribose and green tea/reducing sugar and caffeine due to health concerns.
  • According to MarketWatch, there is a rising demand for natural energy drinks in the market. This has made manufacturers to launch products in a similar category.
  • According to Bevnet, "though the market for natural energy remains less than one percent of the total category — around $64.9 million annually, compared to approximately $10.8 billion for conventional — it is growing at a much faster rate".
  • Year over year conventional growth remains flat at 1.8% while that for natural energy is 16.2%.
  • Companies at the forefront of the trend include Redbull. The company has responded by expanding its sugar-free SKUs range.
  • Other companies that have also responded to the demand are 5-Hour, Amp Energy, and Rockstar.

2) PRODUCT DISTRIBUTION

  • The popularity of energy drinks among "individuals and athletes who are involved in physical fitness activity" is increasing. "The Millennial population drives the market as they are showing a keen interest in sports, inclination towards fitness, more buying capacity and willingness to purchase healthy products."
  • According to Mintel, "two-thirds of older Millennial consumers believe that energy drinks and shots are good alternatives to coffee and sodas." This is in correlation with an increase in the percentage of Millennials consuming energy drinks from 55% in 2015 to 61% in 2016, as well as a forecast that the US energy drinks/energy shots market will be worth "$19.2 billion in sales by 2021, a 47% increase over 2016."
  • There has been an increasing inclination of individuals toward physical fitness, the number of health clubs and fitness centers is on the rise. One of the drivers for the energy drink industry is the increasing amount of fitness facilities.
  • Manufacturers of energy drinks have to come up with product distribution channels to match the trend. One of the companies at the forefront of the trend includes MatchaBar, the company "has ingrained itself with youth culture, and welcomed rap superstar Drake as an investor and landing on the menu at Coachella Valley Music and Arts Festival."

RESEARCH STRATEGY

To identify trends in the US energy drink space, we searched for industry-related articles, market research reports, press releases, and media publications on related topics. After going through numerous articles published by Grand View Research, Mordor Intelligence, Nutritional Outlook, MarketWatch, Forbes, New York Times, Financial Times, Business Insider, among others, we were able to identify distinct trends. These trends were identified based on discussions about them in at least two articles/industry reports.
Part
02
of eight
Part
02

All Natural Energy Drink Trends

Growing demand for low-calorie and sugar-free all-natural energy drinks, the use of naturally energizing ingredients, increased use of coffee and tea as ingredients to gain consumer trust, and the demand for all-natural energy drinks that provide a more layered energy effect for consumers are all trends currently impacting the US all-natural energy drinks space.

COFFEE & TEA

  • One study shows that consumers of energy products show mistrust in the artificial ingredients that companies use in the production of energy drinks.
  • In response to this mistrust, all-natural energy drink brands have been substituting artificial and unknown ingredients with more popular, and well-known ingredients such as tea and coffee.
  • AFS is one of many all-natural energy drink brands that is driving this trend.
  • AFS has a "core set of ingredients within the clean-energy category" and has been researching an ingredient, Ilex guayusa, which they hope to be a game-changer soon.
  • Ilex guayusa is a caffeinated holly leaf with a sweet taste that grows in the Amazon basin in South America. Ilex guayusa is one of many "clean-label ingredients" that AFS hopes to make up part of the "next generation of caffeine".

FUNCTIONAL ENERGY

  • In addition to the growing trend of low-calorie, zero-sugar all-natural energy drinks; all-natural, caffeine-free energy drinks are becoming more and more common.
  • Some brands are choosing to address this trend by using more natural sources of caffeine, such as green tea and ribose. Other brands have turned to the use of organic caffeine and adaptogens like ashwagandha and cordyceps.
  • Brands using organic caffeine and adaptogens target an audience that is more concerned with layering focus, motivation, and mood, in addition to energy. Gamers and Biohackers, notably make up the largest part of this audience.
  • Brands leading this trend include Dynamine and TeaCrine.

NATURALLY-ENERGIZING INGREDIENTS

  • MATI, an "organic craft-brewed energy drink brand" based in Durham, North Carolina, is driving the trend and leading its competitors to search for new, healthier ingredients that they can use and will supply consumers with the same amount of energy.
  • The goal is to provide consumers with the same amount of energy, but with healthier ingredients that will not lead to consumers experiencing a "crash", as is most often experienced by consumers when they consume coffee and other "unhealthy" energy drinks.
  • This trend has not generated the positive results that most brands hoped for, having only found a few organic ingredients that can provide energy without any side effects.
  • Some ingredients that have proved most successful include Creatine and BCAA's. Though these have been the most successful ingredients in the all-natural energy drink market, they have impacted the energy market specifically positively.

GROWING DEMAND FOR LOW-CALORIE & ZERO SUGAR

  • Energy drink brands are being forced to combat the growing concern of weight loss, which is driving consumer's demand for low-calorie, zero-sugar products.
  • This concern has driven consumers to either cut back or completely abandon brands that do not offer products made with natural products that contain less sugar and artificial ingredients.
  • In response to this, brands have turned to the production of "clean" products that contain only all-natural, additives-free ingredients.
  • In addition to producing energy drinks with "clean" labels, brands are producing more and more energy drinks with natural energy ingredients, that are also sugar-free.
  • One brand that has been driving this trend is Red Bull. After research conducted by the company showed an increase in the sales of sugar-free products of up to approximately $727 million after 52 weeks, Red Bull expanded its line of sugar-free products.
  • Another brand that has demonstrated their understanding of consumers' demand for low-calorie, zero sugar energy drinks, and acted on it is 5-Hour, which released its first four-calorie, sugar-free, energy shot in 2017.

Research Strategy:

To identify the trends that currently impact the all-natural energy drinks segment in the United States, your research team leveraged databases of some of the most well-known and credible news/media sites and those most commonly known to contain insights, data, statistics, and trends specific to the beverage industry. Some of such sources that proved most helpful in providing the necessary information include BevIndustry and NutritionalOutlook. With the information obtained from such sources, the research team successfully identify trends that current impact the all-natural energy drinks segment. These trends were vetted and considered as trends because they were deduced from studies and detailed observations made by different industry leaders and industry-specific publications such as the ones mentioned above. Each of the trends was found to be prevalent among key players in the industry, as well as across significant portions of consumers.
Part
03
of eight
Part
03

All Natural Energy Drink Leaders

The five leaders in the all-natural energy drink segment in the US are True Citrus Inc, Hitball, Uptime energy, Sambazon, and Advanced Bio Development. Information on these companies has been compiled in rows 1-4 and 9 of the attached spreadsheet.


TRUE CITRUS INC

  • The company was founded in 2003 and therefore have been in existence for 16 years.
  • They are based in Maryland, USA and have an estimated revenue of $15.1 million.
  • They sell their products in Canada, Mexico, the Caribbean, South Korea, Australia, Asia, the Middle East, Europe, and more.

HITBALL

  • This company has its headquarters in California, USA and has a revenue of $14 million.
  • Hitball was launched in 2005 and have been in existence for 14 years. They sell their products across the United States.

UPTIME

SAMBAZON

ADVANCED BIO DEVELOPMENT/ X2

  • It is located in Englewood, Cliffs, New Jersey. It was founded in 2006 and have therefore been in existence for 13 years.
  • Their products are sold across the US.
  • They have a revenue of $9.6 million.

RESEARCH STRATEGY

We began our research by searching for pre-compiled data in financial news publications, market research reports, and investment databases. Using these sources, we tried to determine what some leaders in the all-natural energy drink segment in the US are. While we found lists of some of the best energy drinks, these are not all-natural drinks. So, we searched through Amazon for the top natural energy drinks. Using Amazon's list of the top 15 brands of natural energy drinks, we then used financial databases to find each company's revenue. However, all these companies are private, so they are under no obligation to publicly release their financial data. Of the 15 companies we found, three brands' revenue information was unavailable. Therefore, we created the list used in the attached spreadsheet based on available revenue information.
Part
04
of eight
Part
04

All Natural Energy Drink Competitive Landscape Part 1

  • Leaders in the all natural energy drink landscape include True Citrus, Hiball, and UPTIME Energy. They range in affordability, target markets, and formula blend ingredients. The full requested information can be found in the attached spreadsheet.

True Citrus True Lemon Energy Packets

  • True Citrus offers sweetened hydration helpers, including powdered energy drink mixes, to provide a boost of energy and to keep its consumers hydrated.
  • True Lemon Energy is offered in two flavors: Wild Cherry Cranberry (the site's reported best-seller) and Wild Blackberry Pomegranate.
  • The 6-packet boxes are moderately-priced, with a one-time purchase option for $3.99 per box or a recurring subscription discount at $2.67 per box.
  • True Citrus energy products are targeted towards health-conscious individuals, who are interested in overall health and wellness, who are working professionals looking to stay productive.
  • True Citrus energy products are appealing to consumers because they contain energy-boosting and brain function enhancing green tea caffeine and are a tasty way to consume more water, which will also improve metabolism and natural energy.
  • The benefits of caffeine reported on the site include improved energy level, mood, memory, vigilance, and reaction times, which are intended to keep working professionals productive through the morning and afternoon of their working day.
  • Further, True Lemon Energy appeals to health-conscious individuals because they are made with clean and simple ingredients, such as real citrus and natural flavors, and have no artificial sweeteners or preservatives.
  • They also appeal to individuals who may have dietary restrictions as they are non-GMO, gluten-free, low calorie, and vegan.

Hiball Energy Drinks

  • Hiball offers two types of energy drinks through its website: Sparkling Energy Waters and Organic Energy Juices.
  • The Sparkling Energy Waters come in packs of eight cans, each 16 fluid ounces, and are offered in five separate flavor packs (grapefruit, lemon lime, peach, vanilla, or wild berry) or a 4-flavor variety pack (wild berry, grapefruit, lemon lime, and peach).
  • Similarly to the Sparkling Energy Waters, Hiball's Oranic Energy Juices are offered in 16 fluid ounce 8-packs, which are offered in 5 singular flavor pack options (black cherry, blood orange, ginger ale, pomegranate acai, or ruby red grapefruit) or a 4-flavor variety pack option (black cherry, blood orange, pomegranate acai, and ruby red grapefruit).
  • The prices for the products range greatly, with Hiball's Sparkling Energy Waters ranging from $23.92 (for grapefruit, vanilla, and peach flavors) to $23.99 (lemon lime, wild berry, and the 4-flavor variety pack).
  • Hiball's Organic Energy Juices also vary in price, presumably by popularity, from $20.00 (black cherry singular flavor pack) to $23.99 (4-flavor variety pack).
  • The target market for Hiball's energy drinks appears to be health-conscious individuals who may also be passionate about fair trade and global poverty issues.
  • Hiball's competitive advantage over other, similar all natural energy drinks is its philanthropic involvement; Hiball is a Supplier Alliance partner with the Whole Planet Foundation, a non-profit formed by Whole Foods Market to mitigate poverty in countries in which it sources its products.
  • Hiball donated more than $10 million to the cause and touts use of certified organic and fair trade sources in its products as part of its core mission.

UPTIME Energy

  • UPTIME Energy offers two options for its energy drinks: either with cane sugar sweetener or sugar free.
  • Both options for the energy drinks come in three flavors: the original citrus, new white peach lemonade, and new blood orange.
  • The price points are the same for both options and all three flavors: 12-packs are available for purchase for $29.99 ($2.50 per bottle) or 24-packs for $59.99 (also $2.50 per bottle).
  • UPTIME Energy's target audience has been largely the same since it started as a supplements company in 1985, stating that its brand has a loyal following among "performance-driven athletes, entrepreneurs, personalities" and "elite military personnel."
  • UPTIME seeks to continue to target their products towards "ambitious, focused and health-conscious achievers" among various industries for the next generation, Millennials.
  • UPTIME's products are appealing to consumers and have a competitive advantage because of their unique formula, filled with "functionally-driven ingredients."
  • This blend and specifically-measured dose of 142 mg of natural caffeine and other, natural ingredients (e.g., ginseng root) provide the optimal level of energy for its consumers.
Part
05
of eight
Part
05

All Natural Energy Drink Competitive Landscape Part 2

Sambazon is available in acai berry pomegranate, acai berry passion fruit, original acai berry, and blood orange acerola flavors. X2 Energy is available in strawberry-kiwi, raspberry, fruit punch, grape, and orange flavors. The attached spreadsheet (column F-G) contains further information pertaining to these brands.

SUMMARY

  • Sambazon offers four flavors and is priced between $2.59 and $2.65. It is an organic drink rich in omega acids and antioxidants. Its target consumer is high-income millennials.
  • X2 Energy offers five flavors and is priced between $2.35 and $3.33. It is a premium and natural energy drink that is used by 15 major league sports teams. It targets affluent individuals aged 18-49 years.

RESEARCH STRATEGY

In order to determine the demographic of X2 Energy, we searched the company websites, industry portals such as Snapshot Numerator, Marketing Land, Ad Age, and research reports covering the energy drinks industry. However, in the case of X2 Energy, we were unable to find any precompiled information in the aforementioned sources. Next, we searched specifically for advertising case studies that may provide insights on demographics. The only case study that provided any demographic information was one on product packaging. We learned that the X2 Energy consumer is between 18 to 49 years old and that the product has a premium position within the energy drinks market. Given that the typical energy drinks consumer is "young and well-off" and since X2 Energy is a premium brand in the space, the X2 Energy target consumer is inferred to be affluent. Further, given that incomes in the United States tend to higher for those with higher education levels, it is likely that the X2 consumer at least has a bachelor's degree. Lastly, we studied X2 Energy advertisements to understand the demographics better. There was no additional information that we were able to gather. All the ads mostly show young individuals performing physical exercises or playing a sport or in the middle of an active workday and the setting is largely urban.

Part
06
of eight
Part
06

Direct to Consumer Case Studies, Part 1

Casper and Away are two prominent and successful modern Direct to Consumer (D2C) companies. Both companies shook up their respect market segments by analyzing a problem and formulating a simple solution. More information about their marketing strategy and success is provided below.

Away

  • Away is a successful durable luggage company run by two young women, Steph Korey and Jen Rubio.
  • Korey and Rubio were disappointed at the lack of options for luggage. Luggages were either cheap and brittle or expensive and durable.
  • Away generated $12 million in sales during its first year. By August 2017, its revenue quintupled.
  • Rubio and Korey were named in Forbes 30 Under 30 list for their success. By 2018, Away raised $50 million in fundraising.
  • The company develops and sells their luggages rather than using retailers as a middleman. Its complex luggage design and eye for quality works better as a product sold D2C.
  • Korey and Rubio note that D2C can fail if the product fails to take hold. Far Away, marketing spread quickly through word-of-mouth and also Instagram posts.
  • Away's marketing consists of artistic photos of their luggages and exotic locales.
  • Part of their marketing strategy is to present themselves as something of a travel company by which their luggages are part of a successful journey.
  • The company celebrates its fans through its marketing by publishing selfies, pictures, and articles, which lends an air of authenticity to its D2C credentials.
  • Away also publishes a magazine that serves the dual-purpose of being informative as well as a means of advertisement for itself.

Casper

  • Casper made over $100 million in its first two years after launching, while operating in a crowded and stagnant field (mattresses). Casper is considered a disruptor in the mattress field.
  • Casper vastly outsells its competitors in the online D2C space. It sells a small selection of products which are all sold D2C.
  • The company's success is based on identifying a key problem within the sleep space. Mattresses and other items were overly complicated to purchase as they were many choices and none of it were grounded in science.
  • Casper simplified mattress offerings by creating one excellent product that is marketed based on its simplicity and superiority.
  • One problem with traditional mattress sales is that the plethora of choices leads to "analysis paralysis". Consumers fear making the wrong choice for a big purchase such as a mattress.
  • The company advertises primarily through its "The Perfect Mattress For" line of advertisements. These ads consist of simple cartoons featuring captions such as "the perfect mattress for ladies who lunch" or the "perfect mattress for detectives".
  • The Perfect Mattress ads make the simple point that Casper is the perfect mattress for anyone and everyone.
Part
07
of eight
Part
07

Direct to Consumer Case Studies, Part 2

The Dollar Shave Club and Bark Box are two successful direct-to-consumer companies. The Dollar Shave Club uses marketing channels, such as social media and TV advertising to sell its products. Conversely, BarkBox primarily focuses on social media sharing.

THE DOLLAR SHAVE CLUB

  • The Dollar Shave Club provides affordable grooming products through its online subscription business model.
  • One of the marketing strategies the company used when it started was creating a viral video entitled, “Our Blades Are F***ing Great” in 2012, which currently has more than 25 million views. The company received 12,000 orders 24 hours after publishing the video.
  • To make the video viral, the company alerted several tech publications on when the video would be published and gave them early access to it. Also, the company selected blogs and websites that appealed to the male demographic such as Uncrate and Thrillist. The company spent more than $10,000 marketing the video on social media. In addition, it paid to be mentioned on shows such as Howard Stern.
  • The Dollar Shave Club strategically published the video in March when there no major TV or sporting events. The video was published on YouTube and generated an organic following since it was shared among different viewers.
  • It informed the viewers on the benefits of using the service as opposed to mainstream products such as Gillette.
  • In addition to the viral video, the company encourages its members to create personal videos for free and post them on social media, which drives leads.
  • The Dollar Shave Club’s strategy of using social media, viral videos, TV advertising, and paid mentions on shows saw the company retain 50% of all its subscribers after 12 months and 25% after 48 months.
  • In 2014 and 2015, the company spent more money than Gillette on TV advertisements. According to iSpot, the Dollar Shave Club spent $64.5 million in 2014 and $43.4 million in 2015 on television advertisements.
  • The Dollar Shave Club uses humorous, creative messaging through social media posts and GIFs, such as "Shave Time, Shave Money" and "Buying Razor Sucks. Let Us Send 'Em Right To You."
  • The company had two million subscribers in 2016.
  • The Dollar Shave Club was bought for $1 billion in 2017 by Unilever.

BARKBOX

  • BarkBox is a company that sells hand-selected treats and goods for canines. It primarily used social media with little marketing spend to increase their customer base.
  • The company was established in 2011 and as it started growing, one of the founders, Matt Meeker, noticed that BarkBox customers were posting videos of how they opened boxes with their dogs. This realization gave the company insights that helped to attract more than 600,000 customers.
  • BarkBox began using monthly themes and improved packaging with bigger BarkBox logos, which resulted in many customers sharing their box-opening experiences on social networking sites.
  • The company encouraged customers to post unboxing videos on social media through coupon codes and a referral program.
  • New customers who posted unboxing videos on Facebook and YouTube would use a specific hashtag that qualified them for a discount in their next purchase.
  • Furthermore, content creators who mentioned promotional codes in their videos would get a percentage of the proceeds from the company.
  • BarkBox’s main marketing approach became social media sharing, which resulted in the company rapidly growing.
  • In 2017, the company became a social media leader in the dog space. It allowed to reach three million Facebook fans and over 1.5 million Instagram followers.
  • BarkBox uses a friendly and fun approach in social media posts, most of which are made by their customers. For instance, on Instagram, the company posts images of dogs in different situation and captions what they are trying to say using their expressions.
  • Examples of scenarios include "Your dog at the top of the stairs surveying guests" and "Asking your dog to do something they don't want to do."
  • The company continues to focus on using social media to engage and entertain people in unique ways by posting content about dogs.
Part
08
of eight
Part
08

Energy Drink Market Size

The current market size of energy drinks in the US is estimated to be approximately $17.62 billion, and all-natural segment accounted for approximately $5.62 billion.

US ENERGY DRINK MARKET SIZE

  • The US energy drink market size was $14.30 billion in 2016
  • The current market size of the US energy drink is estimated to be $17.62 billion.
  • The US energy drink market size is predicted to reach $26.93 billion by 2025.
  • The US energy drink market is predicted to grow at a CAGR of 7.2% from 2017 to 2025.
  • The non-organic energy drink segment is predicted to reach $18.69 billion by 2025, growing at a CAGR of 7.0% from 2017 to 2025.
  • The organic energy drink segment is predicted to grow at a CAGR of 11.6% 2017 to 2025.

ALL NATURAL ENERGY DRINKS SEGMENT MARKET SIZE

  • In 2016, the all-natural segment of the US energy drinks market accounted for over $3.58 billion (25%) of the total market.
  • The all-natural segment is estimated to reach approximately $5.62 billion in 2019.
  • According to SPINS estimation, the US all-natural energy drinks segment will grow at a CAGR of 16.2% from 2016 to 2021.

US ENERGY DRINK MARKET KEY PLAYERS

RESEARCH STRATEGY

After a thorough and wide-reaching search through reputable media sources, market reports, and authoritative agencies such as American Beverage Association, Caffeine Informer, Grand View Research, IBISWorld PwC, PR Newswire, Statista and Market Watch, the current size of the US energy market could not be found preexisting in the public domain, the information is locked behind a paywall. However, by making some logical assumptions and leveraging publicly existing data (past and forecast market size, and predicted growth rate) and with the aid of Omni CAGR calculator, we were able to triangulate the current market size of the US energy drinks as well as the all-natural segment as outlined below:

ESTIMATION OF THE CURRENT US ENERGY DRINK MARKET SIZE

Using CAGR calculator, $14.30 billion (2016) as the initial value, three years (2016-2019) as the number of periods, and 7.2% as the CAGR we estimated the current (2019) market size to be $17.62 billion.

ESTIMATION OF THE CURRENT ALL-NATURAL ENERGY DRINKS SEGMENT MARKET SIZE

All-natural segment accounted for over 25% (one fourth) of the total market in 2016 = $14.30 billion * 0.25 = $3.58 billion
Using CAGR calculator, $3.58 billion (2016) as the initial value, three years (2016-2019) as the number of periods, and 16.2% as the CAGR we estimated the current (2019) market size to be $5.62 billion.
Sources
Sources

From Part 05
Quotes
  • "Whether they are moving to an all-natural formulation or showcasing different kinds of functional benefits, energy drinks are motivated to make changes by the desire to reach the same young, well-off consumers that are driving the shift towards better-for-you food and beverage products of all types."
  • "“I think the demographic for energy drinks has changed in recent years, possibly driven by younger, more affluent consumers who grew up in a world where clean food and a product diversity always existed,” Knepper wrote in response to a question about the changing face of the modern energy drink consumer. "