Boundless Energy

Jul 30, 2007 12:00 PM, By KELLY GATES

The proliferation of new energy drinks is presenting a host of merchandising challenges for retailers


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Buzz-enducing beverages present lucrative opportunities for supermarkets. But for many retailers, the energy drink deluge is amounting to caffeine overload.

“We are bombarded with new energy drinks all the time, and only a few of them are surviving,” said Tom Winter, grocery director for Dorothy Lane Market, Springboro, Ohio.

“We barely have room for the top sellers like Red Bull or Monster. A few years ago, this wasn't even a category, so now we're trying to figure out where to put the few brands that we carry.”

Solid sales increases of 20% or more, year after year, are spurring product introductions in one of the supermarket's fastest-growing categories. Sales of energy drinks in the channel rose 31% to $570 million during the 52 weeks ending June 17, according to Chicago-based Information Resources Inc.

Despite the influx of brands and limited shelf space, Winter isn't too charged up. Most of the upscale retailer's shoppers don't come in search of energy drinks, he said.

Instead, local consumers go to c-stores for these beverages.

“I've noticed that the energy drink sections there are enlarging to accommodate more variety,” Winter said. “It's not just the younger people who want them, it's truck drivers and delivery people who need a drink to keep them alert and awake.”

At Fresh Encounter stores, Findlay, Ohio, Red Bull continues to reign supreme, but the category is very fragmented there too, said Eric Anderson, senior vice president of marketing and advertising for the 30-store chain.

“There are too many energy drinks out there to name,” he said. “Every bottler is introducing their own energy drink. The teen and early 20s demographic are inhaling them.”

Fresh Encounter put shippers of energy drinks in high-traffic areas to encourage impulse purchases. Anderson noted that energy drinks also take up additional cooler space at the chain's stores during the summer months, but he attributes the change to direct-store-delivery vendors adjusting the mix in the cases.

“I predict that the category will always have a place,” said Anderson. “[Energy drinks] will not replace more traditional soft drinks, but will certainly add to the overall mix. We may begin seeing more organic versions and hybrid sports drinks.”



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