While Fyre Energy has a stack of new propositions up its sleeves, will it be enough to grab share from the long-standing leader Red Bull?
A few days back, we noticed a brand taking a blatant dig at energy drink giant Red Bull in its digital ads. A bit of digging around revealed an unusual beverage start-up that was launching attacks on Red Bull on two fronts – pricing and calorie content. Unusual, because the brand, Fyre Energy, was selling its drinks in a powdered form in sachets.
The powder has to be dissolved in a glass of water to prepare the drink. The ‘cut-pour-stir’ format for beverages isn’t new, and we’ve seen it across many brands, like Rasna, Tang and even Glucon-D. However, such a format in the energy drinks space is new, and is in conflict with the existing imagery and formats, like cans and bottles.
The product sells at Rs 30 per sachet, and is available in packs of 5, 15, 30 and 60. The available flavours are classic, orange and lemon, which can be bought in various combos. Fyre Energy also sells shots, and is only available on e-commerce platforms at the moment. Most of its advertising is currently in social media.
It was launched in 2018 by Rahul Manek (former partner at Fairwinds Private Equity) and has undergone rounds of taste correction and packaging changes. The final product is around four months old.
While it is an accepted practice for a new, smaller player to take digs at the larger, dominant entity, it is important to understand what Fyre Energy is up against. As per market research reports, the energy drinks category in India is projected to be worth Rs 2,500 crore in 2020, growing from Rs 1,400 crore in 2017. It is forecasted to reach Rs 3,600 crore in 2022.
Now, the market has historically been dominated by Red Bull, which currently commands a share (value wise) of over 80 per cent. Red Bull has built its fort, which dozens of players have unsuccessfully tried to breach over the years. The brand now shares the space with the likes of Monster Energy and PepsiCo’s Sting.
One of the most popular efforts to topple Red Bull came from drinking water brand Bisleri. Bisleri’s energy drink Urzza was launched in 2014, only to be withdrawn in 2017. “... one of the main reasons was that we were trying too hard to copy Red Bull... This did not bode well...,’’ Ramesh Chauhan, chairman of Bisleri International, told a business daily at that time.
Another famous attempt was Tzinga from Hector Beverages (makers of Paper Boat). Coke tried it with multiple brands. After failing to make a mark with SoBe, PepsiCo launched Sting in India in 2017. Sting is available both in pet bottles and cans at a competitive price point of around Rs 50. Red Bull is priced at Rs 110 for a 250ml can. Berries seem to the dominant flavour and the brands are often seen alongside high octane action sports and e-sports. Red Bull is also seen as a party drink, even finding ground as an ingredient in Jägerbomb, a popular alcoholic party cocktail.
Folks at Fyre Energy are making a conscious attempt to avoid Urzza’s mistake. Siddharth Dhoot, business manager, Triquetrus Essentials (Fyre Energy’s owner), says that resorting to traditionally used formats, like cans and bottles, would make the brand a ‘me-too’ in the category. The former head of marketing at Merck Consumer Health joined Fyre Energy in 2017.
The brand is primarily targeting office goers, who’re looking for a ‘boost’ to keep themselves going through the extra hours at work. Another set of consumers the brand is trying to tap into is gym goers looking for a pre-workout boost. The three primary propositions that the brand offers are value for money, sugar-free and ease of storage/carrying. A pocket friendly price for new jobbers, and low calorie for gym goers.
“There are around 8-10 days in a month where an employee works beyond the regular shifts, across industries. Those are the areas that we target. We realised that they can’t afford an energy drink that is selling at a price point of Rs 100,” Dhoot says.
Fyre Energy’s research revealed that energy drink consumers didn’t like the Rs 100-plus price point, while disliking the high calorie content. “The price point is a problem, even for someone who’s earning a good salary. Another issue we later realised was the flavour. Energy drinks have a berry-like flavour, and is something that the Indian palate doesn’t really appreciate. Consumers wanted, orange, lemon, cola, etc. We decided to introduce newer options,” Dhoot explains. Red Bull, too, tries out limited edition flavours from time to time.
However, unlike cans and bottles, the ‘cut-pour-stir’ format adds another layer before consumption. The consumer needs access to items like a glass, water, etc. “Our target consumers are also usually located in spaces where they have a water cooler within 15 ft,” Dhoot responds.
We put the brand’s proposition across to Samar Singh Sheikhawat, a business consultant, and former CMO of United Breweries for an expert POV.
“The energy drinks market in India is a small one, albeit growing at low double digits. And it is almost completely an urban market. It is also a very profitable market with high margins/gross contributions. It doesn't cost much to produce an energy drink.”
“The core benefits of energy drinks are supposed to be functional, but nobody can quantify the impact and quantum. Hence, the benefits are largely emotional, and also a lifestyle statement. Nobody does it better than Red Bull. Hence, they are able to charge a premium,” Sheikhawat says.
He points out that while ‘Fyre’ is a disruptive brand name, a downside could be consumers actually asking, will it actually cause burns. Speaking about the propositions, he adds, “The sachet format has been done to penetrate the category with price and distribution, disrupt the category, combat the high price of Red Bull, and sell convenience. However, in general, the reconstituted powders market has not done well in India - witness Rasna, Tang and Gatorade today.”
“The format has done well in certain beverage categories, like tea, coffee, sugar, dairy whiteners, shampoos, etc. Wherever there is a higher functional benefit, it could work. However, wherever there is a higher emotional benefit as well as a lifestyle aspect to it, there is a low probability of this format succeeding. With reconstituted powders, you are taking away the experience and fashion/lifestyle statement associated with energy drinks.”
Sheikhawat also points out that the consumer will need access to cold water/ice, a glass, a spoon to mix, etc. “So while you gain mobility, portability and space saving with a sachet, a can has all these aspects as well, albeit at a much higher price. Also, while you can gain distribution and, hence, access to a larger consumer base, building it up will take time, money and effort. And selling the brand only via e-commerce addresses a very small segment All in all, it will have very limited appeal with a smaller and price-conscious consumer segment,” he signs off.