5 Hour Energy: an America's Hottest Brands Case Study

By Published on .

5 Hour Energy
When executives at Living Essentials set out to create a product that could compete in the superhot energy-drink category, they had no idea their brainstorming would lead to a new multimillion-dollar category for the beverage space. They knew the product should be small, because when you want an energy boost, you don't necessarily want to drink 12 ounces. They knew it should have less sugar than others in the space, to avoid the crash that can accompany some energy drinks. They planned to create a package that could sit on counters, assuming a new product would just get lost in the cooler in the back of the store amid the sea of competitors. Lastly, they set out to target working adults, as opposed to the teenage boys that are the cornerstone of much of the energy drink business.

"It was one of those marvelous, once in a lifetime things," said Carl Sperber, creative director at Living Essentials. "Now we're being copied by some of the biggest beverage brands in the industry."

Indeed, both Coca-Cola and PepsiCo have released energy shots, as have Monster, Red Bull and Arizona. The category is expected to nearly double this year to $400 million wholesale, up from $210 million a year ago, according to Beverage Marketing Corp. Still, 5 Hour Energy, which launched in 2004, is the undisputed leader in the field, controlling roughly 70% of the market and expected to top $320 million in sales this year, almost double its sales of $170 million last year. The ubiquitous 2-ounce, red-capped bottles can be found in retailers as diverse as Walmart, Home Depot, Dick's Sporting Goods, OfficeMax, Kroger, Duane Reade and GNC.

Mr. Sperber said there's still plenty of room for growth, especially among women, who have been more apprehensive about trying the product. "There's something spooky about it to them," he says. "Because an energy drink brand has never tried to communicate with this working adult demographic, we're trying to reassure them it's a safe product, something useful and not a fashion statement."

To do that, the brand will begin doing more sampling, particularly at work places. And commercials, which make up the bulk of the brand's $60 million advertising budget, focus on education. "It's an old fashioned Procter & Gamble message. Here's the product; here's the features; here's the benefits," Mr. Sperber said. "We're not going after the teenage boys. They're the last people on earth that need more energy. It's guys like me in their 40s who need it."

Most Popular