The shots are meant for people who want a jolt of caffeine without having to drink a big cup of coffee or one of the 16-oz. energy drinks [image-nocss] that have become ubiquitous. They go down fast, more like medicine than a beverage. That is part of the appeal to their most devoted consumers: students cramming for exams or partying into the night, construction workers looking for a boost and drivers trying to stay awake.
Shots cost $3 or more, said the report. That is $1.50 an ounce; at that price, a 20-oz. bottle of Coca-Cola would sell for $30.
A 7-Eleven store in College Park, near the University of Maryland, has become one of the top sellers of energy shots among the 5,700 United States stores in the 7-Eleven chain, the newspaper said. The store's owner, Million Mekonen, said that sales spiked during finals in May, when the store sold close to 400 shots in a week.
Sales of the shots are rising even as sales of traditional energy drinks like Red Bull have flattened out, the report said. Bill Pecoriello, chief executive of Consumer Edge Research, estimated for the Times that shot sales could reach $700 million this year, nearly double last year's $370 million, not counting sales by Wal-Mart Stores. The estimate was based on sales data collected by Information Resources, a market research firm.
The market is dominated by a tiny company in suburban Detroit called Living Essentials, which began test sales in late 2004 of a product called 5-Hour Energy, packaged in small plastic bottles. Today, 5-Hour Energy accounts for about 80% of the rapidly expanding market, according to Pecoriello.
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The company has only one other product, an antihangover pill called Chaser. But it has forced the big beverage makers to play catch up, the report said. Last month, Red Bull introduced a 2-oz. shot, and Dr Pepper Snapple began test-marketing a 3-oz. version of its Venom energy drink, called Venom Bite. Coca-Cola introduced a shot last year based on its NOS energy drink. Many smaller companies have jumped in too, said the report, often offering products with similar names, like 6 Hour Power, Fuel 7 Hour Energy and Mr. Energy 8-Hour Energy.Living Essentials has spent heavily on advertising to build the market and hold its position against newcomers. It expects to spend $60 million this year on TV advertising for 5-Hour Energy. It has also gone after several of its competitors in court, challenging labels or product names it said were too close to its own.
The most vigorous legal battle pits Living Essentials against a Texas company called Custom Nutrition Laboratories and includes accusations of betrayal, stolen secrets and other skullduggery, said the Times. The two companies worked closely together from 2004 through 2007. At Living Essentials' request, Custom Nutrition developed the formula for 5-Hour Energy and then manufactured and bottled it. Living Essentials handled the marketing, distribution and sales. Then, in late 2007, Living Essentials fired Custom Nutrition and replaced it with another manufacturer.
Now both companies claim ownership of the product's secret recipe, although only Living Essentials continues to produce it. Last month, a federal magistrate judge ordered the two sides to try to mediate their dispute.
Unlike older energy drinks, 5-Hour Energy and most other shots do not contain sugar. Their crucial ingredient is caffeine. But Living Essentials and many of its competitors will not reveal exactly how much of it is in the products, saying only that it is about as much caffeine as in a cup of coffee. The caffeine in coffee can vary widely, from about 80 to 175 milligrams in an 8-oz. cup. Living Essentials makes broad claims for 5-Hour Energy, saying that it is "packed with B vitamins for energy and amino acids for alertness and focus."
Nutritionists were skeptical of such claims, however.(Click here forrecent CSP Daily News coverage of how one retailer has created a "destination rack" for energy shots.)
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