In my ongoing look at cool niche businesses and products, I take the measure of a product that launched a new niche market: the “energy shot.” It’s not the first product that’s taken the size tack; another is Tic Tac, the tiny breath-freshener product that was introduced in 1969.
The Need/Want: A small-portion energy drink
The Business: 5-Hour Energy
There are many ways to skin a niche. One is by size. That’s what Manoj Bhargava did when he created his now-ubiquitous, 2-ounce “energy-shot” product, 5-Hour Energy.
The idea for 5-Hour Energy came in 2003 when Bhargava attended a natural-products trade show in Anaheim, Calif. He told Forbes.com:
“At one booth, reps peddled a 16-ounce concoction claiming to boost productivity for hours. Bhargava took a swig. “For the next six or seven hours I was in great shape. I thought, Wow, this is amazing. I can sell this.”
Bhargava made three outside-the-box determinations at the start: he didn’t think a 16-ounce size would sell; he didn’t want to compete with Red Bull, leader in the energy-drink category; and he didn’t want to share fridge space with Coke or Pepsi. The answer was an energy drink sold in 2-ounce portions.
Bhargava still owns 5-Hour Energy through his privately held company, Living Essentials of Farmington Hills, Mich.
The company doesn’t report revenue or profits, but reports in the business press have estimated that more than $1 billion worth of 5-Hour Energy is sold annually, and Living Essentials nets roughly $300 million. (How about that? From zero sales to $1 billion in less than 10 years.)
As of 2012, 5-Hour Energy commanded 90 percent of the energy-shot niche market it created.
Bhargava, whose net worth is estimated at more than $1 billion, was born in India and moved to the United States in 1967 with his family when his father pursued a degree at Wharton.