Adios, Red Bull? Anti-energy drinks seek to soothe frazzled Americans
www.dailyfinance.com — What goes up must come down, the saying goes. The stock market and the real estate market certainly did. But are we ready to swear off Red Bull and the other liquid uppers that helped fuel the hypertensive, party-never-stops mindset that got us into this mess? A growing number of beverage marketers are betting that we are.
Promising a “vacation in a bottle” or an “acupuncture session in every can,” makers of anti-energy drinks, as they’re known, say that after bailouts, foreclosures and Ponzi schemes, Americans nowadays would rather chill out than tweak out. To help us do so, they’re spiking their new beverages with ingredients such as chamomile, melatonin, and valerian root — all known for their supposed calming effects. Now in convenience-store display cases across America, drinks with names like Slow Cow, Ex Chill and Malava Relax are increasingly jockeying for space with their amped-up alter-egos like Jolt, Monster and Rockstar.
“It’s my quest to relax the world,” says Innovative Beverage Group Holdings (IBGH) CEO Peter Bianchi, who developed the anti-energy beverage Drank. “I saw America becoming more and more hurried. We are going to burn out after a while.”
Innovative Beverage, which also distributes other well-known brands such as Arizona iced tea and Sweet Leaf Tea, saw a 228 percent increase in second-quarter revenue with sales of $1.63 million. The company credits Drank’s growing popularity for the boost. Marketed as a way to “slow your roll” — slang for slow down your life — Drank contains melatonin (a natural hormone used to treat insomnia and jet lag), valerian root (an herb used to counter sleeplessness, anxiety and depression) and rose hips (a source of vitamin C and antioxidants derived from rose plants). %Poll-35209%
Relaxation drinks still represent a small niche of the market. The 7 million cans sold since Drank’s spring 2008 launch is minuscule compared to the 4 billion units — 570 times more — that Red Bull, the top energy-drinks seller, moved in 2008 alone. However, Bianchi is quick to point out that Austria’s Red Bull has had a big head start, having launched in 1987. “They’ve got 12 years on us,” says the former financier, whose headquarters are in Houston.
But energy drinks’ high-growth days may be behind them. While consumers worldwide gulped down $7.8 billion of these highly-caffeinated beverages in 2008, or 8 percent more than in 2007, the flat economy may take some of the fizz out of future sales, according to industry consulting group Beverage Marketing Corp.
Paul Yoffe, a spokesman for Red Bull’s U.S. operations in Santa Monica, Calif., deferred comment on the potential threat to his brand from relaxation drinks to an outside beverage expert. He also declined to say whether the Red Bull planned to enter the anti-energy drinks market, saying “we cannot comment on future marketing plans.”
Relaxation drinks first appeared on store shelves in 2007, but consumers didn’t seem to be thirsty for them until very recently, says Jenny Foulds, a market analyst with Zenith International, a food and beverage consultancy in Bath, United Kingdom. “Maybe it’s because lifestyles are increasingly hectic and there is a realization that that can’t be sustainable,” she says.
Foulds expects anti-energy drink sales growth to be high over the next few years since the products are starting from such a small base. “In such a niche market, there is probably only so far it can go,” she predicts. But then again, she adds, few expected the energy-drinks segment to expand as quickly as it did.
Among the latest to tap into the trend is Canada’s Slow Cow, which is expecting to hit Costco (COST) store shelves later this year. The name is an allusion to the far more aggressive bovines — two bulls locking horns — that grace Red Bull cans. (To fend off a potential lawsuit from Red Bull, Slow Cow had to redesign its logo. The cans now feature a cow relaxing on the ground.)
Besides being fortified with ingredients like chamomile and valerian root, Slow Cow’s key ingredient — the amino acid L-Theanine found in tea — is supposed to help people focus and concentrate, the company says. Whether that’s the case, of course, will be determined by the degree to which consumers embrace the beverage. Between its launch in December 2008 and August 2009, Slow Cow has sold more than 1.2 million cans in Canada, the company says.
In fact, for anti-energy drinks like Slow Cow, Drank, Malava Kava, Ex Chill, Omega Chill, V.i.B. (short for vacation in a bottle), Jones Gaba (from the maker of Jones Soda) and others to succeed, they’ll have to work as advertised, says Gary Hemphill, a managing director at Beverage Marketing Corp. “Consumers are certainly open to new products,” he says. “But if the products don’t meet their needs, whether it’s taste or functional benefit, they won’t be rushing back to the store to buy them again.”
The drinks may encounter other obstacles as well. While people regularly take the nutritional supplements found in many of the relaxation drinks, that doesn’t mean that those supplements don’t carry certain risks. A search of health information portal WebMD, for instance, reveals some of the possible side-effects of valerian root, which can include mild headache or upset stomach, as well as abnormal heartbeats and — surprise, surprise — insomnia. Melantonin, the site says, can cause a lower body temperature in some people and spark changes in blood vessels that affect blood flow, among other problems.
Bianchi says that for all the millions of cans of his relaxation drink that have been sold, he’s never had a single report of a negative side-effect. Drank is now distributed in more than 40 states in stores including 7-Eleven, as well as select Walgreens (WAG) and CVS (CVS) pharmacies. But, he adds, “it’s always in a consumer’s best interest to consult a physician” before consuming a product using supplements.
What Drank provides, he says, is a way to unwind after work for people who might otherwise turn to alcohol. The good vibes kick in anywhere between 15 to 30 minutes after finishing off the drink — and this relaxation state lasts about two hours, he says. As for Slow Cow, it typically takes effect some 45 minutes after drinking it, says Slow Cow spokesman Keith Whitlock.
Beverage experts say that ultimately, energy and relaxation drinks may not prove to be mutually exclusive. “I think the industry is trying to create a product for every consumer and every need state,” Foulds says. “You might want to have an energy shot at the start of the day and something to help you relax at the end of the day.” Indeed, it would be something of a closed loop, commercially speaking.
Which brings up a point. Won’t relaxation drinks, like the energy drinks that preceded them, end up reinforcing the always-on-the-run lifestyle from which they purport to help us escape? Can’t make it to yoga class? No problem, take a swig of this relaxation drink. No time to meditate? Here’s an anti-energy beverage for you. Sure, Vacation in a Bottle has a nice sound to it. But is it anywhere close to real thing? Ultimately of course, that will be for consumers to decide.