Energy Drink Costs Set to Drop with Anheuser-Busch Subsidiary

180 Orange-Citrus Energy Drink was Anheuser-Busch's first non-alcoholic product (2001)

Did you ever wonder why energy drinks seem to cost twice as much as comparable amounts of soda? Well those high-priced days may be coming to an end.

September 9, 2008

Special for Bodybuilding Weekly

Sometimes, that half of a shot of our favorite energy drink (in the famous blue can) is the only thing that gets us rolling to the gym at 7am after a late night at the office.  Well that, and our favorite Nitric Oxide product.  But did you ever wonder why the cost of energy drinks like Red Bull and Redline are so high, relative to other comparable liquids?    

Well, something is about to shake up the industry and possibly force prices down across the board.

Anheuser-Busch ("AB") announced last week that it has created a non-alcoholic subsidiary specializing in energy drinks and high-end waters.  The business, called 9th Street Beverages, includes brands such as 180 Energy, BORBA Skin Balance Water, Icelandic Glacial and Monster.

Sales for these products, which you can find primarily in grocery stores and convenience stores, have skyrocketed by 77% this year.  And the company is secretly working on new energy, specialty and new age drink products that will directly target gyms and health stores.

9th Street Beverages will allow AB to "establish a clear separation between the beer business and the non-alcohol business," the Budweiser brewer said. The subsidiary will include a formal leadership structure for non-alcohol decision-making and sales and marketing personnel focused solely on marketing and expanding distribution of non-alcohol products.

"Our focus will be on reaching new consumers in accounts where alcohol products are sold as well as accounts where alcohol may not typically have a presence, such as travel and transportation venues and 'at-work retail' and specialty accounts such as spas, gyms and health stores," AB announced in a prepared statement.

Why will this force prices down?  Because AB has their own massive distribution network, they don't rely on major supplement distribution companies like Europa.  Distribution companies add another step and significant additional costs to the products you find in your gym, such as VPX's Redline, Biotest's Spike and ABB's Adrenalyn Shot.  AB's lower prices might just have you reaching for a Monster before your workout, instead of a Hardcore Energize Bullet!! 

With the added competition from Anheuser-Busch, competitors will likely be forced to lower their prices in order to compete.

The high profit margins in the energy drink segment have been fiercely protected by supplement companies.  In fact, you may have heard that VPX sued ON-ABB a while ago for copying their energy drink.  Although the packaging of the two products is remarkably the same, VPX lost the case.

Anheuser-Busch debuted its first non-alcoholic drink with 180 Orange-Citrus Energy Drink in 2001. The company also distributes BORBA Skin Balance Water; Monster, the No. 2 energy drink; and Icelandic Glacial.

St. Louis-based Anheuser-Busch Cos. Inc. (NYSE: BUD), through its Anheuser-Busch Inc. subsidiary, is the leading domestic brewer, holding a 48.5 percent share of U.S. beer sales. The company, which accepted a $52 billion takeover offer from Belgian InBev, brews the world's largest-selling beers, Budweiser and Bud Light.  Anheuser-Busch also owns a 50 percent share in Grupo Modelo, Mexico's leading brewer, and a 27 percent share in China brewer Tsingtao, whose namesake beer brand is the country's best-selling premium beer.

Sources:  Biz Journal, FigureRX Magazine