By Phil Boeyen, ShareChat Business News Editor
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Tuesday 9th January 2001 |
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Frucor has already made successful forays with V into Australia, South Africa and the UK and Ireland, and is planning to introduce the product into two other overseas markets this year but has not revealed which ones.
Potential international growth has been a driver of the company's shares, and the importance of the international market was underlined last November when Frucor restructured its management to allow increased focus on overseas business.
One of the hiccups in the UK launch of the product has been lower than expected distributor penetration, and the editor of US Beverage Digest magazine, John Sicher, says distribution is also the key to success in the United States.
"In the US beverage business, as in many other markets, distribution and retail shelf space are the name of the game," he says.
"There's no national distributor that Frucor could use, which means the company may have to build its own distribution system."
Frucor would also come up against the might of beverage behemoths Coke and Pepsi, who have both recently entered the energy drinks arena.
In October Pepsi pipped Coke to the post by buying 90% of Conneticut-based South Beach Beverage Company (SoBe), adding an energy drink called Adrenaline Rush, along with 30 other drinks, to its product range. In New Zealand Frucor owns the Pepsi franchise which it purchased from Lion Nathan.
Coke has shot back quickly with its own orange-coloured citrus-flavoured energy drink called KMX, which is due to be launched in a selected number of US markets this month. In Australia and New Zealand Coke already produces Lift-Plus, and is also banking on another energy drink called Burn to pick up sales in the nightclub market.
"Coke and Pepsi have a very powerful captive distribution system," says John Sicher.
Another company Frucor would have to face in the US is brewing giant Anheuser-Busch, which is also introducing an energy drink called 180 to the market this month. It's the first time since the 1980s the company has entered the non-alcoholic beverage market.
On top of this V would also come up against its perennial competitor, Austrian-based Red Bull, which is already the acknowledged leader in the US market.
However John Sicher says while Frucor would be challenged to make a mark in the US market, he says it isn't impossible, especially if it concentrated on certain areas, such as California or East Coast urban areas.
Mr Sicher says the US energy drink market is still very small, and at this stage its no one can predict its potential.
"To get some kind of perspective on the market, it is interesting to compare forecasted Red Bull sales this year of about 4 million cases in the US with Coke Classic, which will do 2 billion cases," he says.
Whether Frucor decides to take the US challenge will be revealed this year, but at this stage the odds are that it will stick with Europe, where it already has a presence in the UK and Ireland and an office set up in London.
Frucor has forecast a profit of $20 million for the year to June 2001.
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