WildCat Energy Drink A Profitable Franchise Opportunity
The markets that will be most important for energy drink growth through the next decade onwards are the United States, China and Brazil.
The energy drinks market has boomed over the years and consumption has grown on average 10% year on year since 2007 bringing consumption up into the 10’s of Billion Litres in the short space of just 10 years.
This growth will not stifle in the near future due to the burgeoning B.R.I.C.S economies which will represent new growth regions as the present markets such as North America mature. A trustworthy Industry wide sales figure is hard to obtain in relation to the energy drinks market, though (Zenith International) estimates the market to be worth approximately $37 Billion, to put this in perspective (Smirke) placed the total revenue of the global recorded music industry at $16.5 Billion, which demonstrates the growth that energy drinks industry has undergone.
Energy Drink Industry Analysis: In conclusion the Energy Drink industry is clearly a profitable one. The success of Red Bull, Monster and other private lables has ultimately attracted many envious eyes, which have now entered the market looking for their share.
Especially those who have made significant profits from the now declining soft drink industry who are looking to compensate for loses. The level of competition has increased risk for those in the market with the largest share as they have the most to lose such as Redbull and Monster, this is due to the high substitutability of products available, large number of manufacturers and consumer trends changing on a regular basis.
The market is frequently becoming more & more segmented in terms of flavours, various sugar-free & low-carb options. Companies are finding it difficult to create an individual image that can separate them from their competitors. This is likely to change so companies can position themselves to target groups such as women, who currently have a very low consumption rates in comparison to men. Overall the industry will continue to grow sales due to very high sales growth from emerging economies and each market has its own growth.
RedBull Company Analysis: In being the first mover Red Bull has a distinct advantage, over the years it has developed strong brand recognition & loyalty. It is however becoming a victim of its own success. The product is positioned at a premium price & is easily substitutable, as a result there is a growing number of competitors entering the market & undercutting Red Bull by a fraction even. This is leading to a slow erosion of its market share, especially from Monster Energy who is now the market leader in the U.S.
In the past the Red Bull branding has always been distinctive due to its association with extreme sports such as snowboarding & motocross, it is however losing this distinctive image as all the new entrants are emulating this approach and influencing young affluent consumers who are looking to follow new and upcoming brands.
Whereas in the past Red Bull’s appeal has always been to the 18-34 male segment, it now has to look elsewhere due to the level of competition. Therefore Red Bull will not be able to carve out a new competitive advantage. In an effort to steal a slice of Red Bulls market share competitors are entering with
increasingly more masculine extreme images. As a result Red Bull’s image is now quite “soft” in comparison to its competitors. As a result of its competitors focus Red Bull has very little potential to widen its focus outside of its own segment, while still being capable of competing in its current market.
Economically: the energy drinks industry has continued expanding at a double figure rate during the last decade, this growth has largely been unaffected by the downturn & has outperformed other comparable beverage industries. This is quite a testament to the growing popularity of energy drinks especially as they tend to be far more expensive than substitutes such as coffee & mineral. The interesting thing is you would expect the opposite to be true due to declining personal expenditure worldwide due to the 2008 financial crash. The fact is worldwide figures are masking the slowing down of sales in mature economies which are now below the 10% mark, though these growth figures are still quite high the true growth now lies in the BRICS (especially in South Africa) & the Middle-east
Social: Energy drinks companies are very active on social media sites such as Twitter & Facebook, Red Bull in particular as it is mentioned in nearly half of all energy drink related tweets. Socially the energy drinks brands are seen as cool due to the extreme sports image & team sponsorships. This cool image has helped companies such as Red Bull become quite popular with clubbers, students & drivers. Energy drinks however receive a lot of criticism via new digital media such as blogs, especially in relation to deaths that were caused by excessive energy drink consumption in combination with spirits. Consumption of alcohol together with energy drinks is quite popular amongst students & clubbers due to the energy boost, as a result this has a double edged sword for energy drinks companies. Energy drinks companies are also being swept up in the general wellness trend which has existed for the past few years, & has resulted in the release of low carb & sugar free options.
Technological: In terms of technological forces effecting the environment these are mainly limited to improved manufacturing & transport capability. Innovation in this industry tends to come from product segmentation. The most important Technological factor in the Energy Drinks Industry is the Internet. This invention has allowed people across the world interact with the brands from the comfort of their home, whether it is viral advertisements to create buzz such as the Red Bull Stratus event which had the largest live audience on YouTube ever or merely interacting with their social media page.
Environmental: While this could have come under the social section, we decided to keep this separate to highlight its importance to the modern consumer. While there is certain pollutions cause by the manufacturing of energy drinks the Industry is very focused on package recycling. The most common form of packaging is the aluminium can which is 100% recyclable. Some of the cheapest brands do use plastic packaging for their larger products such as 1 litre bottles but these again are recyclable & are a relatively small percentage of sales.
Legal: Legally we are seeing increasing measures being taken against all unhealthy products such as soft drinks, especially in relation to advertising at children. Energy drinks in particular are taking a lot of flak from political establishments which are looking to limit their point of sale. This is down to two reasons rising obesity amongst children & adults, & also the high profile deaths linked with energy drink consumption. While not illegal regulators are looking at idea’s such as sugar taxes to help reduce consumption of these products. There is also restrictions being placed on advertising at children, who are a prime target for companies looking to become recognised by consumers before spending habits are set.
In Conclusion: WildCat is adaptable in terms of its nature as a business, this adaptability can be seen through a range of sustainable and contemporary products that are widely available in a number of different markets. We have a centralised marketing strategy that targets the right people which is proven successful in a number of different international markets including North, South America, Europe and the Middle East. Number of markets that have been manufactured and supplied to over the years totals to 22 and number of Franchisees in the last 3 years totals to 2 where the brand is growing at a natural and organic rate; General data on the companies profitability, general position and growth patterns over the years are to be discussed throughout the development of the business policy.