August 1, 2006
By SARAH THEODORE
The dark horse in the energy drink running
Energy drinks are the fastest-growing category in the beverage industry, and Hispanic consumers are the group every beverage marketer wants to reach — which places Latino-inspired Caballo Negro in the middle of one the hottest beverage markets out there today. A product of Distribuidores De La Energia, based in Burlingame, Calif., Caballo Negro was developed, from flavor to packaging, with Hispanic consumers in mind.
“Everything about the drink was done by Latino people,” says company owner Arley Campbell, who says his product development partners considered a number of options for the product name and surveyed potential consumers on their preferences. Ultimately, the Caballo Negro name and the image of the black horse were chosen for the strong, masculine feeling they conveyed.
“Every day we took new ideas and presented those ideas [to consumers],” Campbell says. “We’d go to swap meets, flea markets and shopping malls and sit down with people and talk to them about what they liked.”
The group spent several months working on the taste profile alone, coming up with a sweet-and-sour flavor that is unique to the energy drink category. Campbell says the flavor has been tweaked several times since the product was created in order to achieve the perfect balance between sweet and sour. “In the very beginning, when someone would take a drink, they would do the whole pucker thing, like they just tried a persimmon that wasn’t ready,” he says. And while Caballo Negro still does not have a sweet profile, he says, “It’s not anywhere near that sour now.”
In addition to traditional energy ingredients, the company also has incorporated ingredients that are well known in Latin American countries. Una de gato, or cat’s claw, is one of those ingredients. The Peruvian herb has long been touted as a remedy for countless ailments. Other functional additions to the beverage include taurine, glucuronolactone, pantothenic acid, inositol, ginseng, guaraná, vitamin B12, vitamin B6, niacin and horny goat weed.
For an extra energy punch, Caballo Negro contains three times as much caffeine as the leading energy drinks on the market. “It’s certainly a high-energy energy drink,” Campbell says. “We put the maximum amount of energy ingredients in it that we thought were a good idea.”
The Caballo lineup includes an 8-ounce product, as well as the Caballo Negro Double Kick, a 16-ounce version of the product. And soon to hit the market will be Caballo Zero, a zero-calorie, zero-carbohydrate product sweetened with Splenda.
While the trend these days is toward larger sizes of energy drinks, Campbell believes it is important to maintain the traditional 8-ounce size.
“We still have many stores that have full shelves of 8-ounce and full shelves of 16-ounce, right on top of each other,” he says. “The 8-ounce has its own market. I think many people have missed that boat. As they abandon the 8-ounce market and go to the 16-ounce market or the 24-ounce market … what you’ve done is basically leave Red Bull all alone again.”
He says Distribuidores De La Energia had no intention of getting into larger sizes, believing it contained enough functional ingredients in the 8-ounce products. But consumers spoke and the company developed the Double Kick size in response.
“The reality is that people are value-conscious and they want volume,” Campbell says.
Caballo Negro is available in 37 states and Mexico through a hybrid distribution system of soft drink bottlers, beer wholesalers, and in some cases, food distributors. The majority of the company’s sales come from the convenience store channel and small Hispanic retail locations.
Without a background in distribution, Campbell says the group learned some difficult lessons while trying to get its product to market. “We spent a year spinning our wheels, and since then we’ve spent the past year really progressing and doing really well as a result of learning from those mistakes we made the first year,” he says. “You learn from your mistakes and we’re quick learners.”
South of the border
Caballo Negro is available in Mexico as well as the United States, with a few — perhaps unexpected — differences. The Mexican product is labeled in English as Black Horse, with Caballo Negro appearing at the bottom of the can — exactly the reverse of its U.S. packaging.
“In Mexico, people want products that are American,” Campbell says. “It was actually the people in Mexico who asked me to consider changing the name of our product.”
Caballo Negro is available in several parts of Mexico, including Guadalajara, Tampico and Monterrey, and soon will be available in Mexico City. Campbell says the south-of-the-border energy drink market differs from the U.S. market in that consumers are hesitant to accept larger sized products such as the 16-ounce can. He says Caballo Negro currently is the only such product in Mexico. “We welcome the entrance of Monster and Rockstar into the Mexican market because we believe it will help make the 16-ounce drink more acceptable,” he says.
Looking toward the future, Distribuidores De La Energia plans to continue its new product development efforts, including new sizes and entirely new products. The company markets its products through a grassroots combination of event marketing, radio advertising and community involvement, and says Caballo Negro has broad appeal that extends far beyond its original Hispanic target.
“Some of our more successful areas are Anglo areas where there are very few minorities, which blows us away because we didn’t believe that would be true,” Campbell says. “But customers will prove you wrong. If they like it, they like it, and it doesn’t matter where you are.”