Beverage Industry

Hansen: Unleashing the Possibilities

October 1, 2004

Hansen: Unleashing the Possibilities

If beverage trends are like fashion, as is so often said, it’s no surprise that many industry trends begin on the West Coast and travel through the rest of the country. Two trends that did just that — energy drinks and natural beverages — form the core of Hansen Beverage Co., and that has made its business as sunny as its home in Southern California.
For years, the Hansen’s name was synonymous with juices and natural soft drinks, but the company’s  sales really picked up steam when it introduced Monster Energy Drink in 2002. Hansen’s sales have grown during the past three years from a little less than $100 million in 2001 to $138 million last year, with another 54 percent increase reported during the first six months of this year.
Hansen entered the energy drink category early, first with an energy fruit juice smoothie, and then with Hansen’s Energy Drink as a contender to then-newcomer Red Bull. The company began to see that its wholesome, good-for-you image might be holding it back from the kind of sales its Austrian rival enjoyed. It decided to break loose from its traditional business and launch the edgy new brand called Monster. With the tagline "Unleash the Beast" and an unconventional 16-ounce can, the brand jumped to a top spot in the energy drink category.
The launch of the Monster product led Hansen to reach in a new direction, dividing its business into two very different consumer segments and ways of getting to market.
“We were able to create a brand that had its own individual personality,” says Hansen Chairman Rodney Sacks. “It was much more cutting edge, much more risqué in the image we portrayed for the brand, and the way we marketed the brand. We were able to do things that wouldn’t have appealed to our traditional consumer or have been suitable for the Hansen’s brand.”
Extreme sports, rock concerts and tattooed brand ambassadors became the Monster trademarks, while traditional Hansen’s products stuck with healthful, good-for-you values. The company’s approach to distribution also changed, with Monster going through a new network of distributors rather than the company’s own direct-to-retail system.
“We really divided the company’s focus and management into two different styles,” says Sacks. “One style was to deal with the traditional natural Hansen’s brand and image, and the second part of the business was to go through a direct-store-delivery (DSD) system with single-serve products.”
Hansen’s natural juices, soft drinks and canned smoothies have strong distribution through all retail channels in the western United States, as well as natural food outlets and health food sections in chain stores in the rest of the country. Monster and its DSD counterparts such as Energade and Lost Energy, go to market via a national network of about 300 distributors.
Two business tracks
While Monster can take much of the credit for Hansen’s rapid growth, the company never took its eye off its more traditional business, and products such as the natural sodas account for a significant portion of its business. The two divisions of the company operate autonomously, and each has a dedicated team to develop products and marketing.
“When you look at new products, the concepts come from two different places,” says Sacks. “The guys who are involved in running the traditional Hansen’s business look at where the opportunities are in the Hansen’s type products, and the DSD division looks at the potential opportunities that lie in single-serve, convenience store type products. We look at those two markets very differently.”
Some of the fruits of the company’s new product development process are a soon-to-be-released Monster line extension and a tea-based line of carbonated soft drinks under the Blue Sky natural soda brand.
“It’s common for companies to say they want to innovate and do something new, but then you look at what comes out and it looks pretty much like everything else,” says Mark Hall, senior vice president of the DSD division. “When we’re looking at a new product opportunity, we have to say ‘How can we do it differently so the consumer doesn’t see it as the same old thing?’”
The company saw one of those opportunities earlier this year when it launched Lost Energy Drink, a product targeted at young, skeptical consumers missed by other energy drinks. It teamed with the surfing industry’s Lost Enterprises to license the name, and decorated the can with art that is identified with the surf and skate cultures.
“When we launched the Lost brand, we launched a brand that had its own personality,” says Sacks. “We didn’t think it would cannibalize our Monster brand; it was intended to address a different consumer.
“We try to understand the market a little differently and not just try to put out additional flavors or facings on a shelf. There needs to be a reason for a brand to exist or a reason for a line extension.”
While the company says it often speaks to consumers to generate ideas, it does not rely on them for complete answers.
“I live and breathe our business,” says Sacks. “I do quite a bit of traveling, and I come back from Europe with my suitcases filled with beverages, with ideas and concepts in mind. This might not give you an answer, but it often leads to something or an idea that we can develop.”
“In the new age category, especially, a big part of it stems from current pop culture,” continues Hall. “People are going to try something new if they like the look and feel of the thing. They have to be comfortable and identify with the personality the product projects.”
He says the company achieves a distinct look for its products by working with edgier, sometimes unknown artists rather than standard graphic designers.
“When we decided to redesign one of our products we went out and found an underground artist for the design,” he says. “He doesn’t design beverage products, he does interesting art that speaks to people, young people. His art is very iconic in nature.”
Hansen’s also chose a unique design for its new Blue Sky tea-based soft drinks. The idea for the products began in house, says Hilton Schlosberg, vice chairman, president and chief operating officer, and the company recently launched the product in green tea, red tea and white tea varieties.
“We chose a graphic artist to design a can that reflected the Asian feel of the product. We came up with something that looks good and fits the style of the product,” he says.
Do-gooders and tattoo artists
Like the products themselves, Hansen’s marketing follows very different tracks. Both natural products and energy drinks use event marketing as a promotional tool, but the juices and natural sodas are tied into cause marketing, and energy drinks with athlete endorsements, concert tours and extreme sporting events.
“We had to rough it up a bit,” says Hall about developing the Monster marketing strategy. “A lot of our sponsored athletes are covered in tattoos. Whether our consumers actually look like that or will ever look like that, it doesn’t matter. People are attracted to that aggressive style and rebellious image.”
The company hires product samplers who hand out drinks from Monster trucks with oversized wheels and wild graphics — a far cry from the typical beverage executive’s vehicle of choice, and that’s just the point. “It doesn’t do any good for me to go to a concert and hand the drink out, I don’t fit the brand image,” says Hall.
“We have more than 100 people in the field right now. We take a hands-on approach. I don’t know if there is another beverage company our size right now that has invested in the field support we have.”
But no matter what body art Monster representatives might have, Hall says, the company trains and tests its product samplers to ensure they provide accurate information about the products.
“When you’re trying to put the right personality on a brand, it’s really easy for it to get twisted,” he says. “When we first came up with the Monster brand, we chose the claw icon because it fit the name and the aggressive personality we wanted to portray. Right away, some people wanted to give it a horror image and do Halloween promotions. We had to say ‘it’s not about Halloween. Monster means extreme, it’s dramatic.’ You have to constantly massage the message to project the right personality. Monster is the meanest energy drink on the planet.”
Taking a gamble Hansen couldn’t have hoped for a marketing opportunity more befitting the extreme Monster brand than this year’s sponsorship of the Las Vegas monorail. The company didn’t just put its name on the shuttle, it painted the train black with the trademark claw logo, secured vending rights at monorail stations, and is even outfitting the inside of the monorail cars with video screens to convey the Monster lifestyle.
“This was a big spend for us and it was a unique opportunity to be able to, in one location, reach what is expected to be 35 million visitors to Las Vegas each year,” says Sacks. “We were able from one unique venue to reach consumers throughout the United States. We believed it was something that a small company like ourselves would very rarely get the opportunity to have.”
On the opposite end of the spectrum, but just as appropriate for the natural beverage brands, Hansen teams up with causes such as City of Hope and licensed children’s characters such as Clifford the Big Red Dog. Hansen’s Natural Sodas feature a per annum “Save Lives, Send Tabs” campaign during which the company donates as much as $100,000 to the City of Hope cancer research center. Blue Sky products are paired with fundraising for the Society for the Prevention of Cruelty to Animals, and the Jr. Juice brand Hansen acquired from Pasco in 2001 features the Clifford character and book give-aways.
Last year, Hansen landed an exclusive three-year Women, Infants and Children Supplemental Nutrition contract in California for 100-percent apple juice and apple grape juice in 64-ounce bottles.
According to Schlosberg, the contract is a reflection on the company’s ability to both develop well-branded products and to manage the cost structure of its business.
“One hundred-percent juice is a very important product for us, but it’s a product in which your success is measured in cost per ounce,” he says. “One of the skills we have at this company is that we understand our cost base.”
The state of California estimates that Hansen’s will supply nearly 24.5 million bottles of apple juice and 5.4 million bottles of apple grape juice blends per year through the contract.
Hansen’s diet natural sodas, which were introduced with Splenda a few years back, also have been a boon to the business, especially with today’s weight concerns.
“The diet sodas have zero calories, so whether you’re on a low-carb diet or a low-calorie diet, it still appeals to that consumer,” says Schlosberg. “Hansen’s sodas have traditionally been bought by moms for children. Now we have a product that can be bought by mom for herself.”
The company rolled out a low-calorie version of Monster last year, but chose not to make it a “diet” drink. It simply changed the color on the claw logo from green to blue for consumers who are calorie conscious, but don’t necessarily want to advertise it.
“Low-carb is a sexy way to say diet right now,” says Hall. “A diet is something you’re on when you want to lose weight or have a health concern. It can have a negative cogitation. Low-carb is a way to say reduced calories that, for the time being, is in fashion.”
Energy drinks will continue to be a big part of Hansen’s business, but the company says future offerings could look quite different than today’s.
“The energy category is going to evolve,” says Hall. “We think there are hybrid products that will rely on the energy foundation, but they will have a different platform and will look very different from what we have today.”
And if the energy within Hansen itself continues, the industry can count on more innovation and a willingness to go in whatever direction that takes the company. Posing for a photo, and quoting a song popular in the ‘80s, they joke, “The future’s so bright, we have to wear shades.”