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Discount Sales a Bad Sign For Energy Drinks

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November 25, 2008 – Comments (5) | RELATED TICKERS: MNST , KO

“There’s more energy out there than anyone can handle,” Jon Auspitz, president of Wham Food and Beverage Company, said. “I don’t have to tell you how many brands there are. It’s crazy.”

For business reasons, Auspitz declined to name any of the beverage companies that he works with, but said some of the big energy drinks brands “just have way too much [product.]”

“We’re talking hundreds of thousands of cases,” he said.

While the energy drink market continues to grow – up 13.5 percent September 2008 according to Information Resources Inc. – that growth has slowed significantly. IRI reported that the category expanded at more than double that rate – 34.4 percent – in the 12 months ending on July 15, 2007.

While those numbers and Auspitz’s experience suggest that energy drink firms haven’t calibrated their production to match moderating demand, he offered advice to companies that suddenly find themselves with more product than they know what to do with.

“Really, what you should do is go exhaust any avenues you have, and if you can’t move it, give us a call back,” he said. “You have to do the best you can for yourself. With us, you will lose.”

Complete Article at BevNet.com

5 Comments – Post Your Own

#1) On November 25, 2008 at 1:44 PM, Gemini846 (50.29) wrote:

There are several reasons for this, call it the energy drink bubble if you will. Early players to the market were innovative and provided a "new" product. Bandwaggoning by the big beverage makers saw declines in soda sales and wanted to get those buyers back into thier fold. They didn't produce any innovative products so thier marketing arms went to work and tried to compete on price. Its basically just a followup to the coffee bubble.

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#2) On November 25, 2008 at 2:41 PM, DemonDoug (74.00) wrote:

how about the frozen yogurt bubble?  pinkberry is the one i'm most familiar with, but there are literally dozens of clones out there, all with similarly rediculous names.

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#3) On November 25, 2008 at 2:58 PM, kdakota630 (29.59) wrote:

I own a sports nutrition store, and while I don't particularly specialize in energy drinks, I've definitely seen a decline in their sales in recent months, and I don't even bother to try to keep up with the brands as there seem to be several new ones being launched every week.

I'm quite certain a lot of the smaller, less-established ones will start falling by the wayside.  If the economy gets as rough as some are predicting, I wouldn't be surprised to see 80-90% of them gone inside of 2-3 years.

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#4) On November 25, 2008 at 3:11 PM, kdakota630 (29.59) wrote:

I forgot to mention...

DemonDoug, your comment is the first time I've heard anything about a "frozen yogurt bubble."

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#5) On November 25, 2008 at 9:49 PM, Option1307 (29.69) wrote:

kdakota630

You must not live in Caliifornia/Arizona then...They're everywhere, its like starbucks in the late 90's, one on every corner. OK, not that bad, but it's getting ridiculous.

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