Current Issues in Marketing Strategy

A new player has entered the Australia energy drink market, trying to out position premium drinks provider Red Bull. The New drink is called Pure Energy, it is headed up by Sheriff Taylor, former owner of London's most up market night club and his team and is being positioned as the most premium drink on the market. So is it possible to out premium the market leader and still make money?

Coka Cola and Red Bull have been cashing in on the premium pricing strategy for ages, charging the highest price when producing for the lowest cost. Their strong brand and staunch customer loyalty allows them to. That being said, growing markets like that of the energy drink market are filled with niche players, but can they be more premium?

To add intrigue to the mystery, Pure Energy will be priced around $8 per case cheaper than Red Bull and as I have been arguing with marketers everywhere, I'm not sure you can be super premium and charge a lower wholesale price than your competitors. However, it all comes down to scope & physical product placement.

Distribution Scope

Unlike every energy drink under the sun, Pure Energy are not chasing the convenience market, instead, they are leveraging their established on-premise industry contacts, to take on the product as a Red Bull alternative. Now, let me be very clear on this, publicans can not serve someone a Pure Energy when they ordered a Red Bull (people have been sued for that), but they can suggest an alternative. I saw this happen at Valve on Greville St (Melbourne) and the consumer was happy enough to trial it. In this way they are creating their own demand.

Creating Demand

I posed a question in a previous article questioning who would buy a Zu Energy 'homebrand' as opposed to a Red Bull? The point I was making at the time was that the "cool, premium" image sells Red Bull, people want to be seen drinking it. Pure Energy have no brand strength, nothing to leverage, no position at all...they need a trigger.

Their distribution strategy creates that demand. When people ask for an energy drink at their top end bar / night club and they are given a Pure Energy, it creates a brand, but more importantly it creates turnover. Do people care what they are drinking during a big night out? Possibly, but for a club owner, you can certainly see the attraction of having an exclusive 'super premium' brand of your own. Charge what you want, customers can't buy it at the supermarket or the local servo...this one is special.

Positioning / Distribution Strategy
A super premiun brand requires super premium distriution. The venues you are seen in are your brand, until one day you own that image yourself. The strategy for Pure Energy is to position themselves in only the best most premium night clubs, bars, hotels & eateries. The convenience market is not a priority in the short term.

Sherif Taylor is trying to launch his drink much like he launched his club, build a brand first and foremost, the demand will follow. I can see a long term vision of moving into the mainstream market, but not until they have an actual foothold in the market. Overall, I have to admire the stance, at least they are not another Rockstar or Grasshopper...do they have any strategy?

Josh Strawczynski's Opinion
As I said, I admire the strategy, it has game....does it have legs? Certainly Sherif Taylor and his team are leveraging their existing relationships and assuming this goes well, we could see them succeed in winning a foothold on the branding front. It is however a big "if". I can see how a bar owner would be disgruntled by Red Bull's pricing strategy and arrogance, but the bottom line is that they do sell a truck load of their stock...if it works why fix it?

Sam Berringer's Opinon
I actually like the product, it tastes good and looks fancy, but I have seen many many 'class leading' products fail. I question if they have enough financial resources to successfully brand the product against the likes of Red Bull, V & Mother.

There will be more to follow on the trials and tribulations of Pure Energy. What would you do if you were them?