Obesity and Energy Drinks - Essay Example

Opportunity Recognition Entrepreneurship is the activity of creating value by seizing the opportunity, and utilizing the human, social and financial resources (Pfeifer, 2003). It involves a certain amount of risk taking on the part of the entrepreneur. I have been able to identify the need and demand potential for energy drinks in the UK. Health drinks are very common and has a very good market but the need for the society is an energy drink that would help them alleviate stress. Obesity is a growing concern in the UK where more than half the adults are heavier than recommended (EMIS & PIP, 2008). The primary reason for overweight has been identified as the quality of food and drinks consumed by the people. People have been making attempts to change their diet and way of life by including daily exercises and workouts as a part of their daily routine. Early morning after the body has fasted for several hours the glycogen level is low and energy drink would help to boost energy without providing any sugars. According to a JP Morgan study, the obesity ‘epidemic’ is a ‘new’ challenge for the food industry (Langlois, 2005). Market Obesity in England it has increased markedly among both adults and children since the mid-1990s (National Statistics, 2008b). Physical activity declined for both sexes after 2003. Between the mid-1980s and 2001, the daily energy intake among both men and women reduced. Obese people are unable to visit gyms due to lack of energy as they have adopted a sedentary lifestyle. In 2000, 27 per cent of girls aged 2 to 19 years were overweight compared with 20 per cent of boys (National Statistics, 2008c). The health and energy drinks market is growing as a result of busy lifestyle and health concerns (Reuters, 2008). The high-income urban population (both sexes and all age groups) would be the initial target audience. The target audience would be men and women between 16 and 55 with high disposable income. Energy boosting drinks are no more the prerogative of the niche market but have a good appeal in the mass market as well. The initial product launch would be in and around London. The target would be the people who are pursuing aggressive goals because their determination elsewhere will reflect in their attitude towards life. The product has to be physically available at convenience stores or within the consumers reach. Competition The F&B sector in the UK has registered phenomenal sales growth for want of healthy diet choices and healthy alternatives which includes energy drinks. The health drinks market includes drinks like soy-based/yoghurt drinks, sports/energy drinks and these are being preferred over soft drinks (Langlois, 2005). This is evident from the table below: Source: Langlois (2005). The main competitors in the energy drinks market are Red Bull and Monster Energy (Appendix A). Mintel had forecast that sales of drinks like Red Bull would cross the £1bn mark (BBC News, 2005). Red Bull contains stimulants like sugars and caffeine and the study by Mintel (2008) confirmed that adults consuming such drinks could feel the instant boost in energy level. This new energy drink will have a competitive edge over others because this is an energy drink that boosts energy without any sugars. The Mintel report further says that sales of sports and energy drinks have gone up by 85% in the UK between 2002 and 2007 and as of April 2008 as many as 59% of consumers in the UK reported never ever having consumed energy or sports drink. Hence there is plenty of scope for a new entrant as there exists a gap between the demand and supply. Interest This opportunity is of great interest to me as it is a challenge. Consumer psychology would have to be tapped into and the right marketing strategy devised. I am particularly interested in this venture as I love taking challenges and am prepared for the risk. These are the essential attributes necessary to be an entrepreneur. I am confident of achieving profits by the optimal utilization of resources. I am innovative by nature and would be able to introduce new marketing strategies and create differentiation. As Lindsay (2005) says creativity is one of key characteristics of entrepreneurial and part of the innovation process. Opportunity Recognition (OR) is an important aspect of entrepreneurship. it means to pick industries that are undergoing a sea change. Most in the energy drink market are established chains and fighting them would be tough but vision distinguishes entrepreneurs from their competitive competitors (McIntyre, 1998). My vision would guide me through adversities. I know entrepreneurship is a continuous learning process and I am prepared to learn as I work. Even though I have the necessary characteristics as my strengths, the drawback that I have is finance. I have approached the bankers and they have agreed to support my start-up. I have the necessary qualifications and would like to introduce an energy drink with a difference. Idea journey and its development This idea hit me as I have friends and relatives around me that have been obese for quite some time. I am seeing how their lifestyle has changed over the years. They do make attempts to go in for early morning gym and other exercises but with no concrete results. Some go on a crash diet and do not have the necessary energy required for such workouts. They even refrain from taking the energy drinks available because of the sugar content. Others do go in for such sessions but since they consume the energy drinks, they do not derive any benefits as the drinks contain sugars. It then struck me that perhaps I could derive a formula without the sugars. I chanced upon some literature in the library, did further research, and contacted some drink manufacturers to lend me their manufacturing capacity and contacted bankers. I further investigated on the statistics of the energy drinks available in the market and the consumption. I realized that I was on the right track and decide to utilize my creativity and marketing ability. References: BBC News 2005, Energy drink market to hit £1bn 11 August 2005, viewed 01 February 2009, http://news.bbc.co.uk/2/hi/business/4144078.stm EMIS & PIP 2008, Obesity and Overweight, Patient.UK, viewed 01 February 2009, http://www.patient.co.uk/showdoc/23068957/ Langlois, A 2005, Obesity –Reshaping the Global Food Industry, JP Morgan, viewed 01 February 2009, http://www.unepfi.org/fileadmin/events/2005/roundtable/presentations/nyrt_langlois_2005.pdf Lindsay, NJ 2005, Toward A Cultural Model of Indigenous Entrepreneurial Attitude, viewed 01 February 2009, http://www.amsreview.org/articles/lindsay05-2005.pdf McIntyre, S 1998, Cataloging for entrepreneurs #4: the vision thing: using your entrepreneurial vision to fuel your catalogs growth, Direct Marketing 60.n12 (April 1998): 44(4). British Council Journals Database. Mintel Oxygen 2006, Top energy drinks, by brand, 52 weeks to June 18, 2006, 7 July 2006, viewed 31 January 2009, http://academic.mintel.com.ezproxy.brighton.ac.uk/sinatra/oxygen_academic/search_results/show&/display/id=228645#hit1 Mintel Oxygen 2008, Cranberries with a kick, 2 May 2008, viewed 31 January 2009, http://academic.mintel.com.ezproxy.brighton.ac.uk/sinatra/oxygen_academic/search_results/show&/display/id=335062#hit1 National Statistics 2008b, Eating & exercise, Directgov, 17 Januanry 2006, viewed 01 February 2009, http://www.statistics.gov.uk/CCI/nugget.asp?ID=1329&Pos=4&ColRank=2&Rank=176 National Statistics 2008c, Diet & Nutrition, Directgov, 30 March 2004, viewed 01 February 2009, http://www.statistics.gov.uk/CCI/nugget.asp?ID=718&Pos=5&ColRank=2&Rank=352 Pfeifer, S 2003, Modification of entrepreneurial behaviour by cultural factors in emerging economy, viewed 01 February 2009, http://www.unece.org/indust/sme/Pfeifer.doc. Reuters 2005, Analyse the UK Health Drinks Market as Convenience and Health Concerns Drive the..., 25 June, viewed 01 February 2009, http://www.reuters.com/article/pressRelease/idUS89342+25-Jun-2008+BW20080625 Appendix A Top energy drinks, by brand, 52 weeks to June 18, 2006 Source: Beverage Industry 15-07-2006 FIGURE 1: Top energy drinks, by brand, 52 weeks to June 18, 2006 Brand Sales $ % Change Market Share Red Bull 248,721,300 27.9 46.4 Monster Energy 66,270,220 147.6 12.4 Rockstar 57,146,500 86.3 10.7 Full Throttle 33,679,430 258.1 6.3 Sobe No Fear 27,317,530 100.4 5.1 AMP 21,703,940 26.4 4.1 Sobe Adrenaline Rush 20,536,700 11.5 3.8 Tab Energy 6,037,725 NA 1.1 Sobe Lean 4,637,515 469.2 0.9 Powerade 4,491,713 -8.7 0.8 Total 535,468,200 54.3 100.0 Source: Mintel Oxygen (2006). Read More