The Energy Drink Industry Why the Energy Drink Industry Functional Beverage Functional Beverage Industry Energy Drinks

The Energy Drink Industry Why the Energy Drink Industry Functional Beverage Functional Beverage Industry Energy Drinks

The Energy Drink Industry Why the Energy Drink Industry Functional Beverage Functional Beverage Industry Energy Drinks

Richards, Tim, Operations Manager has reference to this Academic Journal, PHwiki organized this Journal The Energy Drink IndustryKurt Ondash, Hugh Stewart, Andrew Brown, Mike DiChiaraWhy the Energy Drink IndustryCollege students a major target populationSubstantial industry growth in past decadeSimilar ingredients lead to importance of pricing strategiesHealth concerns in addition to side effects Functional BeverageEnergy drinks categorized as a Functional BeverageA non-alcoholic drink that includes in its as long as mulation ingredients such as herbs, minerals, vitamins, amino acids in addition to /or additional raw fruit or vegetablesOften claim specific health benefits

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Functional Beverage IndustryUS Functional Beverage IndustryEnergy Drinks63%Nutraceutical Drinks10% Energy DrinksBeverages that contain caffeine in combination with other presumed “energy enhancing” ingredients such as taurine, herbal extracts in addition to B VitaminsEnergy drink segment includes options such as shots, ready-to-drink in addition to powder as long as msFocusing on the traditional canned energy drinkIndustry Analysis

Perceived effects:Increased mental per as long as manceIncreased physical per as long as mancePotential ingredients:High level of caffeineHerbsB vitaminsGuaranaTaurineetc.BackgroundFinancing in addition to DistributionFinancingUse existing infrastructureAMP using PepsiCoCreate entirely different companyRed BullDistributionUsually use large beverage companiesMonster uses Coca ColaTypical CustomerOriginally:Target athletesCurrently:Young adults (teenagers in addition to people in their 20s)Overworked individualsHip hop crowdExtreme Sports Enthusiasts

Firms in the IndustryOnly including energy drink cansNOT energy shots or vitamin waterAbout 200 br in addition to sOver 300 varieties of energy drinksTop three energy drinks:Red BullMonsterRockstarHerfindahl-Hirshman Index (HHI)Barriers to EntryBarrier to entry is not extremely highIndustry very profitableLow initial investment if infrastructure in placeHard to compete with leading energy br in addition to sTop 2 energy drinks control 80 percent of market

Product DifferentiationEnergy drinks are different based on:IngredientsHealth (low-calories, low-sugar, low-carbohydrates)Countries drinks are soldRegulationsTop Energy Drink Sales 2010-2012Top 3 Energy Drinks

Red BullLaunched in Austria,1987Started by group of investorsMore than 35 billion cans sold5.2 billion cans sold in 2012In 165 countriesGrew 15.9% in sales in 2012Invests heavily in Formula 1 ChampionshipsSlogan: “Red Bull gives you wings”MonsterLaunched by Hansen Beverage CorporationOver 25 different energy drinks soldCoca Cola Used as distributorAdvertises by supporting “the scene, the b in addition to s, our athletes in addition to our fans”Over 8 billion cans sold since product launchedSlogan: “Unleash the Beast!”RockstarCreated in 2001 as independently owned venture20 different flavorsIn 30 countriesUses PepsiCo as distributorGained market share by selling a drink that is “twice the size of Red Bull, but sold at the same price”Slogan: “Party like a Rockstar”

Pricing StrategiesMain Pricing StrategiesTacit CollusionPromotional StrategiesPrice LeadershipSecond Degree Price DiscriminationDrink SizesDrink QuantitiesTacit Collusion

Tacit CollusionSeemingly independent, but parallel actions among competing firmsNot a as long as mal agreementSeen in energy drink industry with price matchingTacit CollusionA lack of significant product differentiation in addition to production costs Similar ingredients found across all br in addition to s:B-Group VitaminsTaurineGinsengPromotional StrategiesSimilar promotional strategies across the industryFocus on sponsoring extreme sport athletes/eventsPromote br in addition to image by targeting events with “high energy”Emphasize the overall experience, not just the drink

Richards, Tim KRQQ-FM Operations Manager

Promotional StrategiesEach of the major br in addition to s employ on campus student repsGoal is to create br in addition to awarenessFree giveawaysProviding energy drinks at partiesPromoting on-campus eventsTacit CollusionIndustry dominated by 2 major firms:Red Bull (42% market share)Monster (37% market share)Consistent industry growth in sales with a small number of competing firmsTacit Collusion

Price LeadershipPrice LeadershipOccurs when a firm leader in its sector determines the price of the productCompetitors may choose to lower prices in hopes of capturing market shareEnergy Drink Price Leader: Red BullPrice LeadershipRaw data regarding prices collected from:Wal-Mart (wholesale retailer)Fastrac (gas station)Universal Deli (corner store)Survey taken by 100 current college students:Energy drink consumption/preferences

FDA Actions Announced investigation into energy drink related deaths Congress sanctioning preliminary exploration into caffeine in addition to stimulant levels, in addition to marketing tactics In response Red Bull in addition to Monster hired lobbying firms 2010 – under threat of further FDA restrictions, Four Loko agreed to remove stimulants from product Investment RecommendationIncreased regulatory scrutiny makes industry future very uncertain Monster Beverage Company (MNST) RecommendationsDevelopment of lower caffeine productsFocus on creating a healthier alternative from both a ingredient in addition to marketing perspectivePotential regulations could shift target market Regulation could create opportunities as long as market/price leadershipConsumers have shown willingness to pay premium as long as healthier option

Richards, Tim Operations Manager

Richards, Tim is from United States and they belong to KRQQ-FM and they are from  Tucson, United States got related to this Particular Journal. and Richards, Tim deal with the subjects like Music

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This Particular Journal got reviewed and rated by Laboratory Institute of Merchandising and short form of this particular Institution is US and gave this Journal an Excellent Rating.