The energy drinks market was always unaffordable for the masses. Red Bull still sells at over 100 rs. per 250 ml can. Most D2C brands that emerged in this space also sold at similar prices.
As a result, the energy drinks segment itself was tiny, accounting for just 0.5% of all beverages in 2017. Red Bull dominated primarily because of its stronger distribution.
When Sting started offering 20 rs. bottles with the same functional benefits of Red Bull, it completely shook up the space. Being a part of PepsiCo, it penetrated deep into India and found entirely new segments of consumers.
Result: Sting now has 90% of the energy drinks market, and energy drinks as a segment is now 5% of the beverages market! In absolute terms, Red Bull didn't decline, Sting expanded the category itself by 10x.
Sting succeeded because of Pepsi’s distribution, which isn’t available to new-age brands. Online routes have a ceiling so brands need to go offline to grow. But pricey brands don’t often succeed offline. To reduce prices, they need more sales, which can only come from offline which they don't have.
It’s a chicken and egg problem most new age brands fail at.
This post was originally shared by Yashraj Sharma on Linkedin.