Energy Drinks 2014Jener Smith Adam Calabrese

Overview• Category Demographics• Stores We Audited• Depth of Category• Success of Strong Brands• Private Label • Category Strategy

Category Snapshot      LifeStyle

BehaviorStage Cosmopolitan Centers

Affluent Suburban Spreads

Comfortable Country

Struggling Urban Cores

Modest Working Towns

Plain Rural Living Total

Start-Up FamiliesHHs with Young Children Only < 6 96 139 171 215 326 357 223Small Scale FamiliesSmall HHs with Older Children 6+ 104 100 130 200 132 179 140Younger Bustling FamiliesLarge HHs with Children (6+), HOH <40 169 249 202 260 134 256 214Older Bustling FamiliesLarge HHs with Children (6+), HOH 40+ 59 148 113 104 75 223 126Young TransitionalsAny size HHs, No Children, < 35 82 146 99 72 69 104 89Independent Singles1 person HHs, No Children, 35-64 96 66 15 88 39 33 55Senior Singles1 person HHs, No Children, 65+ 9 32 10 35 20 7 17Established Couples2+ person HHs, No Children, 35-54 156 136 152 130 104 110 130Empty Nest Couples2+ person HHs, No Children, 55-64 89 59 140 91 62 51 82Senior Couples2+ person HHs, No Children, 65+ 19 12 26 55 46 13 26Total 85 101 100 117 88 109 100

Demographic Variables % Volume Index

Race of Head of Household     White 58.9% 85 Black 9.6% 80 Hispanic 23.8% 192 Asian 2.7% 64 Other 5.0% 231Number of Persons     1 Person 12.1% 45 2 Persons 23.5% 73 3 Persons 21.4% 133 4 Persons 20.4% 154 5+ Persons 22.6% 203Household Income     Under $10,000 12.7% 160 $10,000 - $19,999 6.3% 54 $20,000 - $29,999 14.7% 130 $30,000 - $39,999 7.5% 71 $40,000 - $49,999 13.9% 150 $50,000 - $74,999 19.4% 107 $75,000 - $99,999 10.3% 88 $100,000 - $149,999 9.4% 82 $150,000 or More 5.8% 72

Red Bull

% Volume Index

   72.6% 1055.0% 4217.2% 1391.9% 443.2% 149

   11.9% 4429.6% 9120.3% 12621.8% 16516.4% 147

   4.5% 575.5% 4711.4% 10115.0% 1439.1% 9819.6% 10813.4% 11410.6% 9310.9% 135

Monster

% Volume Index

   67.0% 978.0% 67

14.9% 1213.4% 796.7% 307

   14.4% 5320.0% 6119.4% 12027.0% 20419.3% 173

   3.0% 384.3% 37

13.0% 1159.8% 93

14.6% 15732.0% 17710.6% 905.5% 487.2% 89

Rockstar

8.9% 20517.6% 11726.3% 14924.8% 12113.7% 727.5% 581.2% 11

Age of Head of Household Age 18 - 24 Age 25 - 34 Age 35 - 44 Age 45 - 54 Age 55 - 64 Age 65 - 74 Age 75 or More

6.6% 15131.9% 21222.0% 12521.9% 10711.8% 624.1% 321.7% 16

4.9% 11222.9% 15227.3% 15524.9% 12214.0% 734.1% 321.8% 17

Stores We Audited

Fayetteville• Wal-Mart MLK

• Wal-Mart Joyce • Neighborhood Wal-Mart Wedington

• Wal-Mart on Campus• Harp’s Garland

• Harp’s Wedington• E-Z Mart MLK

• Kum and Go College Ave. • Murphy USA Wedington

• Sam’s Club Garland

Depth of Each StoreStore SKUs Unique

Wal-Mart MLK 55

Wal-Mart Joyce 38

Neighborhood Wal-Mart 37

Wal-Mart on Campus 23

Harp's Garland 81 5

Harp's Wedington 60 8

Murphy USA 34 6

Kum and Go 68 16

E-Z Mart 43 4

Sam's Club 8

ITEM $ (000)

DOLLAR SHARE

ITEM BUYERS

(000)

ITEM PENETRATI

ON

ITEM $ PER ITEM

BUYER

ITEM TRIPS

PER ITEM BUYER

ITEM $ PER ITEM

TRIP

ITEM UNITS

PER ITEM TRIP

N=RAW BUYERS

PURCHASE CYCLE

(IN ELAPSED

% REPEAT BUYERS

(% 2+

LOYALTY (SHARE

OF $ REQ.)

% ITEM $ ON DEAL

% DOLLARS WITH

MANUFACTURER COUPONTOTAL U.S. 2,640,889.3 100.0 59,697.6 51.4 44.2 9.4 4.7 2.7 32,667.0 23.3 75.1 100.0 39.1 1.3

WEST SOUTH

306,916.1 100.0 6,690.3 51.4 45.9 9.4 4.9 2.6 3,739.0 22.8 75.5 100.0 33.5 0.9

TOTAL U.S. 4,633,535.0 100.0 93,012.1 80.1 49.8 11.3 4.4 2.7 48,124.0 24.4 84.3 100.0 29.9 1.0WEST SOUTH

671,506.5 100.0 11,037.1 84.7 60.8 13.3 4.6 2.8 5,731.0 22.9 86.9 100.0 27.4 0.8TOTAL U.S. 20,945.8 0.5 2,081.6 1.8 10.1 2.3 4.5 1.6 726.0 34.9 38.8 7.2 14.3 0.8WEST 1,824.9 0.3 238.0 1.8 7.7 1.7 4.5 1.8 76.0 41.4 36.8 6.6 4.5 0.3TOTAL U.S. 2,095.6 0.1 388.6 0.3 5.4 1.5 3.6 1.5 126.0 29.7 24.6 8.2 13.7 0.0WEST SOUTH CENTRAL

NA NA NA NA NA NA NA NA NA NA NA NA NA NA

TOTAL U.S. 21,326.5 0.5 2,380.8 2.1 9.0 2.2 4.0 1.5 842.0 36.4 39.6 7.4 18.7 3.5WEST SOUTH

3,343.4 0.5 324.5 2.5 10.3 2.9 3.6 1.5 95.0 38.0 49.1 7.3 7.0 1.3

TOTAL U.S. 6,787.3 0.2 504.0 0.4 13.5 2.1 6.5 1.7 197.0 28.7 29.6 7.9 7.9 0.0WEST SOUTH

NA NA NA NA NA NA NA NA NA NA NA NA NA NA

TOTAL U.S. 7,996.9 0.2 714.0 0.6 11.2 1.9 5.9 1.6 291.0 35.3 31.8 7.4 9.6 0.0

WEST NA NA NA NA NA NA NA NA NA NA NA NA NA NATOTAL U.S. 94,656.8 2.0 3,416.8 2.9 27.7 3.2 8.6 1.6 1,281.0 31.7 44.8 23.8 10.2 0.0WEST SOUTH

13,416.3 2.0 520.5 4.0 25.8 3.6 7.2 1.8 181.0 34.1 37.5 25.3 12.0 0.0TOTAL U.S. 52,800.6 2.0 1,206.2 1.0 43.8 2.8 15.5 3.3 537.0 32.3 37.1 48.5 12.8 0.4WEST SOUTH CENTRAL

NA NA NA NA NA NA NA NA NA NA NA NA NA NA

TOTAL U.S.

170,066.6 3.7 3,236.4 2.8 52.5 3.1 16.7 4.3 1,227.0 28.9 40.7 41.4 8.5 0.1

WEST SOUTH CENTRAL

19,404.7 2.9 406.9 3.1 47.7 3.4 14.0 3.8 146.0 24.3 42.0 31.6 5.2 0.0

TOTAL U.S. 31,448.1 1.2 1,050.8 0.9 29.9 4.3 6.9 2.0 449.0 23.7 52.7 28.5 18.7 0.4WEST SOUTH

NA NA NA NA NA NA NA NA NA NA NA NA NA NA

TOTAL U.S. 13,527.0 0.3 974.6 0.8 13.9 2.5 5.5 2.2 437.0 30.5 31.9 10.4 15.4 0.1

WEST SOUTH CENTRAL

NA NA NA NA NA NA NA NA NA NA NA NA NA NA

TOTAL U.S.26,430.7 0.6 1,597.6 1.4 16.5 3.1 5.3 1.5 578.0 25.0 38.0 13.1 21.4 0.4

WEST NA NA NA NA NA NA NA NA NA NA NA NA NA NA

ALL REM. CARB. BEVERAGES- DIET

ALL REM. CARB. BEVERAGES- REGULARAMP R - ALL REM. CARB.

ROCKSTAR DT - ALL REM. CARB. BEVERAGES- DIET

FULL THROTTLE DT - ALL REM. CARB. BEVERAGES- DIETFULL THROTTLE R - ALL REM. CARB. BEVERAGES- MONSTER ASSAULT R - ALL REM. CARB. MONSTER KHAOS R - ALL REM. CARB. MONSTER R - ALL REM. CARB. RED BULL DT - ALL REM. CARB. BEVERAGES- DIET

RED BULL R - ALL REM. CARB. BEVERAGES- REGULAR

ROCKSTAR JUICED R - ALL REM. CARB. BEVERAGES- REGULARROCKSTAR R - ALL REM. CARB. BEVERAGES- REGULAR

Depth of Category• Monster and Red Bull

account for the majority of facings/shelf space

• Red Bull had 85 SKUs

• Monster had 103 SKUs

• Rockstar successful in Wal-Mart on Campus

Success of Strong Brands

• Gross margin percentages are very high for Red Bull and Monster

• Stores like Walmart on Campus and convenience stores should carry more Rockstar because depth of single can products yields high gross margins

Red Bull and Monster• According to Ad Hoc Base 2007 data, Red Bull had sales of

$170,066,000 in U.S. and Monster had sales of $94,656,000 in U.S.

• Item penetration for Red Bull was 2.9 and Monster was 2.8 • Repeat buyers was slightly higher for Monster than Red Bull• Gross Margins were high for both (an average of 35%-40% in

all stores)

Cash Machine/Flagship

Private Label

Private Labels Discovered• Yike’s: E-Z Mart• Nuclear: Kum and Go• Quick Strike: Murphy USA

Kum and Go private label “Nuclear” had gross margins of 8%, while E-Z Mart’s “Yike’s” yielded 4% gross margins.

Private Label Performs Poorly• WHY?• Because you can taste the difference!• Gross margins for E-Z Mart private label “Yike’s” performs

poorly and should be viewed as a waste of shelf space• Private Label is commonly found at convenience stores where

category is over-saturated

Solutions for Convenience Store• Example? • Wal-Mart on Campus!• This location took advantage of its ability to stock many single

can SKUs by stocking a large variety of Rockstar and Monster as well as high depth in Red Bull single cans.

Category Strategy• Know your target market: Wal-Mart MLK takes advantage of

college market and carries large number of SKUs• Wal-Mart on campus stocks Rockstar• Private Labels should always be re-evaluated • Grocery stores should take advantage of packages and

convenience stores should focus on variety of strong brands