The news that Coca-Cola is planning to quietly slip its hands into the wallets of clubbers and trendy urban types with a new functional energy drink, Burn (Marketing, October 19) marks a change in tactics for the soft drinks giant.
In the past, Coke has targeted children, teenagers, families and young professionals in an onslaught of advertising, promotions and sampling.
But this time Coke isn't taking the big-brand, big-budget approach. Instead, it is hoping to imbue Burn with street-cred by taking a below-the-line, word of mouth approach to marketing.
But will this prove a challenge for a company more au fait with multi-million-pound ad budgets, and how should Coke tackle marketing the drink in an increasingly saturated market?
The launch comes as the UK functional energy drink market, a segment within the energy and sports drinks sector, is booming. Manufacturers such as Virgin with its dt brand, Vimto with Indigo, Lucozade with Solstis and Food Brands Group with Red Devil, are joining the gold rush that kicked off when Red Bull created a new sector, 'functional energy', six years ago.
The market targets everyone from sports enthusiasts to students, people clubbing to people needing an afternoon kick at work. The general target audience is 16- to 34-year-olds, with a core of people in their early 20s. Most of all, though, it is people looking for something to keep them going, whether over a spreadsheet, on a snowboarding ramp or in a night club.
Zenith International's 'Report on Sports and Energy Drinks 2000' predicts that the energy and sports market could be worth pounds 700m by the end of the year, and hit pounds 1bn by 2002. It lists the functional drinks market as being worth pounds 42.8m last year. Volumes in the market are growing at 127% (ACNielsen, MAT Aug 2000, total take home). Last year, single cans of Red Bull outsold single cans of Coca-Cola in British supermarkets (Zenith).
According to the Zenith report, Red Bull has a retail sales value of pounds 31m, with a 72% value share of the functional energy drinks category.
The brand sold 300 million cans in the UK in 1999.
Marketing spends in this sector have tended so far to be small, although now they are on the increase. For example, last year Solstis spent pounds 500,000 on ads; this year its spend is pounds 2m.Red Bull's popularity has undoubtedly been fuelled more by word of mouth than advertising, but it still spends pounds 5.5m on ads.
With the sector becoming more crowded, some like Virgin dt and Red Devil are now using TV and cinema ads, while others such as Indigo, Hype, and Magic focus on below-the-line activity targeting students and clubbers.
Coke is hoping to slot into the below-the-line category. Initial distribution will be through venues in selected cities such as Manchester, London and Newcastle, and the launch will, apparently, be hype-free. The product is being packaged in a black can with an orange match flame on the front, in an attempt to create a slicker, more stylish offering than the brash reds, blues and silvers of existing energy brands.
Andrew Coker, Coke's communications director, says: 'We've developed a high energy drink that we know consumers want. Its marketing will be purely underground, below-the-line, as that's the best way to get to the sophisticated market we're targeting. We're not actively looking for publicity for the brand.'
US brand SoBe, a range of all-natural fruit drinks and teas, is an example of how a low-key brand can attain a cult following through underground marketing. It has just launched in the UK and sold 14.8 million cases in the US last year, and is expected to reach 22.5 million cases this year.
SoBeis the fastest-growing brand in the US beverage industry, yet markets purely through grass roots activity, extreme-sports sponsorship and promotions.
But Coke is accustomed to marketing mainstream, family-friendly brands: Coca-Cola with its polar bear family; Fanta and its sunny, spot-free teenagers and diet Coke with its office sweethearts. Just how it will fare when it tries to mix with UK's clubland, with its connotations of drug-fuelled all-nighters, is an interesting prospect. One of the trickiest areas it will have to negotiate is getting distribution in the right places to build the image it is aiming at.
Paul von Bergen, managing director of youth marketing agency Chemistry, says: 'Working a product into club culture is not something you can do with traditional marketing techniques. You need to get the drink pushed from behind the bar, not pulled by the consumer, and can't approach distribution in a heavy-handed way. It's a different ball game with club owners than with the major multiples.'
When Coke does have Burn secured in the venues it wants, it must persuade club-goers to order a vodka and Burn, rather than the usual vodka and Red Bull, or whichever other brand is stocked in the venue.
The need for a fresh idea
But the market is saturated, and to appeal to consumers Coke will have to create real points of differentiation for Burn.
Alyson Lilley, head of marketing at Virgin Drinks, says: 'The UK market is very advanced, with the majority of people understanding the revitalising benefits of an energy drink. To be successful, a new product needs to offer a real point of difference, broadening consumer choice.'
One brand that has tried to steer away from pushing the functional effects of energy drinks in its marketing is Red Devil. Earlier this year it signed up ex-footballer and actor Vinnie Jones to front its 'You can always repent campaign', creating a personality and attitude that some of its competitors have failed to achieve.
Tim Bertin, Red Devil managing director, says: 'We wanted a cheeky, popular character to drive awareness and gain the brand street-cred.'
James Osgood, account director for Red Devil at its creative agency Kunde & Co, adds: 'We saw a gap in the market to create a drink with attitude, and that's what we've pushed for. Most brands are pushing the energy aspect, but all they're doing is pushing the market, not themselves.'
Shortage of sponsorship
As there are so many players in the category, Coke will have to try hard to find something new to do for marketing and promotions. Club tours, extreme sports sponsorships and campus activity have all been bagged by other brands.
Red Bull is heavily associated with sport, with sponsorships including the Red Bull Surf Safari and the Red Bull King of Concrete BMX competition.
Red Devil sponsors the Asprilla motorbike team. Vimto's Indigo and Indigo Extra swamps student unions with sampling and promotions, and Virgin dt:nt has sponsored the Radio One Love Parade dance carnival in Leeds and coverage of the Ibiza club scene for Rapture TV.
Many in the industry believe a successful way to harness an audience is to let them discover the brand for themselves, to create a sense of ownership and attachment. This would appear to be the route Coke hopes to take with its low-key approach. Alex Hannon, marketing manager for SoBe says: 'The drink has to be a discovery brand. Let the consumer find it for themselves without having it pushed into their face.'
Von Bergen adds: 'Energy drinks are quite a personal thing to young people, because they're involved in the emotional attachment side of their lives, like clubbing and partying. Youth still believes clubbing is underground and secret, and want to discover the brands involved in that for themselves.'
Perhaps the most interesting challenge facing Coke will be whether it has the patience to watch a brand develop slowly, with-out resorting to its advertising ammunition.
Von Bergen says: 'If it jumps in and starts splashing money about, the brand could be destroyed before it's even started. They'll want to see volume within six months - and that could be a problem for them.'
However Coke fares with Burn, its entry into the market will create more interest and add even more credibility to the energy drinks sector.
Red Bull managing director Harry Drnec says: 'It's a lucrative market, and the many players who have been jumping in are finding it's not a game.
You can't market a functional drink like you do a soft drink. But we're excited about Coke's entry - it could push the category even further forward.'
TOP 10 ENERGY AND SPORTS DRINKS BRANDS
Rank Brand pounds million % growth
1 Lucozade Energy 88.5 +10
2 Red Bull 30.9 +253
3 Lucozade Sport 20.9 +23
4 Lucozade Low Calorie 5.5 -23
5 Lucozade Solstis 2.5 na
6 Purdey''s 2.3 +24
7= Oasis 1.8 +3
7= Indigo 1.8 +16
9 Lucozade NRG 1.4 -69
10= Red Devil 1.3 na
10= Lipovitan B3 1.3 +201
Source: ACNielsen All UK retail outlets, 1999.
FUNCTIONAL ENERGY DRINKS MARKET SHARE
Red Bull 72
Value share(ACNielsen) % of 1999.