Do you want to start an energy drink production business? If YES, here is a complete guide to starting an energy drink production business with NO money and no experience plus a sample energy drink production business plan template.
As an aspiring entrepreneur who wants to start a business, one of the very first steps to take is to carry out findings to know if the residents of the location you are about to launch the business will be willing to purchase the goods or services you are about to start selling.
This is very important if you don’t want your business to die a natural death. For instance; if you anticipate opening an ice cream related business, you are expected to launch the business in a location with the right climatic condition; a place where there is some measure of fair weather in terms of heat.
If you make the mistake of launching an ice cream business in a city known to snow all through the calendar year, you are likely not going to make headway with such business.
If you can launch an energy drink production business in the right location, and you have different flavors of energy drinks, you may not have to struggle to get people to consume your products. Needless to say, that there are available markets for energy drinks no matter the part of the world you decide to start your company. This is so because loads of people, adults and children alike consume energy drinks.
Although starting a standard energy drink production company can be capital intensive for an entrepreneur that may just be starting out, nonetheless if you are able to undertake a thorough market research and feasibility studies before launching the business, you are sure going to breakeven before most businesses that started on a same day, within same location and under similar economic conditions.
The bottom line is that economic recession hardly affects the rate of consumption of energy drinks especially during the summer period.
Principally, what most standard energy drink production companies rely on to increase sales cum revenue generation is robust distribution network within their coverage areas. Retailers, restaurants, sports clubs and hotels et al are some of the key business entities that you should partner with if you want to do well in this line of business.
So, if you are considering going into the energy drink production business, all you would need are some capital to purchase or lease/rent a suitable production facility and then equip the facility with the needed machines and equipment.
You would also need some additional capital to pay your employees at least for the first 3 months and also to pay your utility bills. When you read through this article, you will have a clearer picture on how to go about launching the business.
18 Steps to Starting an Energy Drink Production Business
Table of Content
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 9. Discuss with an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Raise the Needed Startup Capital
- 14. Choose a Suitable Location for your Business
- 15. Hire Employees for your Technical and Manpower Needs
- 16. Write a Marketing Plan Packed with ideas & Strategies
- 17. Work Out a Reasonable Pricing for your Services & Products
- 18. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
1. Understand the Industry
Energy drink is one commodity that is consumed in all parts of the world and of course those that are in the business of producing energy drinks are known to generate sales year in year out if the business is well – managed. As a matter of fact, economic downturn hardly affects the consumption of energy drinks because it is a commodity that is as important as the air we breathe in.
Production companies in the energy drinks production industry basically produce soft drinks that help boost energy through various ingredients including caffeine, vitamins and herbal supplements. Common vitamins and herbs include vitamin B, guarana and taurine. The drinks are properly capped and labeled accordingly before being sold to the general public.
The Energy Drink Production industry in the united states of America has achieved strong growth over the years, outperforming other packaged beverage production industries. Beverage producers benefited from increased per capita disposable income which allowed consumers to continue purchasing industry goods, particularly as impulse purchases at convenience stores.
Going forward, the industry is projected to continue to grow, even though at a slower rate than the previous years. Energy Drink Production companies will benefit from declining demand for carbonated soft drinks as consumers seek to replace soda with alternative beverages.
The Energy Drink Production industry is a thriving sector of the economy of the United States of America and they generate a whooping sum of $8 billion annually from more than 123 registered and licensed energy drink production companies scattered all around the United States of America.
The industry is responsible for the employment of well over 11,775 people. Experts project the energy drink production industry to grow at 8.1 percent annual rate. The Monster Beverage Corp., Red Bull and Rockstar Energy Drink are the market leaders in the energy drink production industry, they have the lion market share in the United States of America and in most countries of the world.
Research conducted by IBISWorld shows that the liquid energy drinks segment accounts for the largest share of industry revenue, and IBISWorld expects this segment will account for an estimated 67.6 percent of total industry revenue in 2016.
The report shows that this segment includes canned drinks such as Red Bull and Monster, which convenience stores stock and sell to consumers.
These drinks are commonly carbonated and include a wide variety of ingredients, and they are known for containing very high levels of sugar and additives that are not found in coffee products. The report further stated that this segment has continued to dominate the overall Energy Drink Production industry, but in recent years it has faced pressure from the energy shots segment, which includes 5 Hour Energy products.
Despite the fact that there are big corporations who are into the production of energy drinks, the fact remains that the energy drink production business has minimal barriers to entry, with relative minimal start – up capital.
Over and above, the energy drink production industry is a profitable industry and it is open for any aspiring entrepreneur to come in and establish his or her business; you can chose to start on a small scale servicing a community or you can chose to start on a large scale with distribution networks and several outlets in key cities all around the United States of America.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who drink energy drinks cut across all genders and age group, hence the demographic composition for an energy drink production company is all encompassing.
The truth is that when it comes to selling energy drinks and other beverages, there is indeed a wide range of available customers. In essence, your target market can’t be restricted to just a group of people, but to all those who reside around the locations where your energy drinks are distributed and who have purchasing power.
So, if you are tinkering with going into the energy drink production business, then you should make your target demographics all encompassing.
It should include corporate executives, students, migrants, entrepreneurs, business people, celebrities, military men and women, sports men and women, tourists and every adult in the neighborhood where your energy drink is distributed.
3. Decide Which Niche to Concentrate On
It is chief to state that there is no known niche area when it comes to the energy drink production business. Every player in this line of business are basically involved in producing soft drinks that help boost energy through various ingredients including caffeine, vitamins and herbal supplements.
Naturally, it is common to find a standard energy drink production company engage in preparing and selling all of the under listed;
- Manufacturing ready-to-drink energy drinks
- Manufacturing ready-to-drink energy shots
- Manufacturing energy drink mixes
The Level of Competition in the Industry
There is hardly any industry or line of business anywhere in the world where there is no competition, as a matter of fact, it is competition that brings creativity and innovation into the business world.
This goes to show that if you are looking towards starting an energy drink production company, then you should brace – up for competition in the industry.
The truth is that you are not expected to compete amongst energy drink production companies in your city, but also international and world class corporations such as The Monster Beverage Corp., Red Bull and Rockstar Energy Drink et al.
Most energy drink production companies are leveraging on creativity in terms of packaging and marketing to continue to stay afloat in the industry. One creativity approach that is common is ensuring that their energy drink conforms to the appropriate health standard.
No doubt, the fact that there are stiff competitions in the energy drink production industry is not hampering the performance of new entrants; most of them know how to recreate and re – strategize to reach out or attract more customers.
4. Know Your Major Competitors in the Industry
It is the norm that in every industry, there are always brands that perform better or are better regarded by customers and the general public than the others.
Some of these brands are those that have been in the industry for a long time, while others are best known for how they conduct their businesses and the results they have achieved over the years. These are some of the leading energy drink production companies in the United States of America and in the globe;
- Monster Beverage Corp.
- Red Bull
- Power Horse
- Rockstar Energy Drink
- Meridian Energy USA Inc
- XL Energy Drink Corporation
- 5 Hour Energy
- Cott Beverages USA
- The Drink Ink
- Robust Energy Drink
- Private Energy Drinks USA
- T20 Energy Drinks USA, LLC
- Hype Energy USA
- Bomb Energy Drink
- Kick Start
- Mountain Dew
- Full Throttle
- Coded Red
- Jolt Energy Drink
- NOS Energy Drink
Starting an energy drink production company is not a difficult business venture, but at the same time, it is a business that requires thorough economic and cost analysis – feasibility studies and market survey et al if you are looking towards making profits in the industry.
Part of what you need to focus on in this line of business is how to build a standard energy drink production and packaging plant, a robust distribution network, branding, how to maintain your machinery and equipment and how to take care of your overhead before your business breaks even. Other cost that should be considered during planning and budgeting are supply of packaging materials, fuel and maintenance costs et al.
Lastly, there are a number of permits that are required to run an energy drink production company in the United State of America, and of course there are also public health codes to observe.
5. Decide Whether to Buy a Franchise or Start from Scratch
Good enough, energy drink production business is one of those businesses that sell franchise; brands that have gained huge market leverage can successfully sell their franchise. Any aspiring entrepreneur who is considering starting an energy drink production business has the option of either starting from the scratch or buying an existing franchise.
There are loads of factors that should be considered before choosing the option to follow. Some of the factors to consider are the cost of starting from the scratch or buying a franchise, your financial capacity, your vision, and your business skills and experience.
If your intention of starting an energy drink production business is to grow beyond one city, if you want to have presence in key cities in the United States and Canada, then starting your energy drink production company from the scratch is your best option.
But if you just want to start a business with the aim of just making profits and you don’t have the required finance and experience to build a business from the scratch, then it will pay you to buy the franchise of a successful brand in the energy drink production industry.
Please note that most of the big and successful energy drink production companies around started from the scratch and they were able to build a solid business brand.
It takes dedication, hard work and determination to achieve business success and of course you can build your own energy drink production company – brand to become a successful brand with your distribution network spread throughout the length and breadth of the United States of America and other countries of the world if you decide to go into exporting your energy drinks and also selling franchising.
6. Know the Possible Threats and Challenges You Will Face
If you decide to go into energy drink production business today, one of the major challenges you are likely going to face is the presence of well – established brands in the energy drink production industry both in the United States of America and from other parts of the world. The only way to avoid this challenge is to create your own market (distribution network).
Some other challenges and threats that you are likely going to face is economic downturn and unfavorable government policies. There is nothing you can do as regards these threats and challenges other than to stay positive that things will work well for you.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
If you have plans to launch an energy drink production business, the legal entity you choose will go a long way to determine how big the business can grow; some energy drink production companies design their business for neighborhood market, some for city wide market, while others for national market via franchising and opening chains of distribution network globally.
If your intention is to grow the business and have distribution networks spread across the United States of America and other countries of the world via franchising, then Limited Liability Company, LLC or even general partnership will cut it for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for sole proprietorships and general partnerships.
Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholders meetings and other managerial formalities.
These are some of the factors you should consider before choosing a legal entity for your energy drink production business; limitation of personal liability, ease of transferability, admission of new owners, investors’ expectation and of course taxes.
If you take your time to critically study the various legal entities to use for your energy drink production business with the ability to sell franchise and open chains of distribution networks all across the United States of America, you will agree that limited liability company; an LLC is most suitable.
You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.
8. Choose a Catchy Business Name
When it comes to choosing a name for your business, you should be inspired because whatever name you pick out for your business will go a long way in generating a perception of what the business represents. Usually it is the norm for people to follow the trend in the industry they intend operating from when naming their business.
If you are considering starting your own energy drink production, here are some catchy names that you can choose from;
- Booster® Energy Drink Company, LLC
- Bask ‘n’ Bounce® Energy Drink Company, LLC
- Tippy Tapa® Energy Drink Company, Inc.
- Hyper Life® Energy Drink Company, Inc.
- Islanders® Energy Drink Company, Inc.
- Stay Alive™ Energy Drink Company, Inc.
- Blue Zest© Energy Drink Company, Inc.
- Clear Star™ Energy Drink Company, LLC
- Snow White© Energy Drink Company, Inc.
- Cassandra Butler© Energy Drink Company, Inc.
9. Discuss with an Agent to Know the Best Insurance Policies for You
In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your energy drink production company.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own energy drink production company in the United States of America;
- General insurance
- Health/Medical insurance
- Liability insurance
- Workers Compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
Presently, if you are considering starting your own energy drink production company, usually you may not have any need to file for intellectual property protection/trademark. This is so because the nature of the business makes it possible for you to successfully run the business without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
But if you just want to protect your recipe, your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO.
11. Get the Necessary Professional Certification
Before you can be permitted to operate an energy drink production company both in the United States of America and in other parts of the world (developed world most especially), you are expected to apply and obtain certain certifications or permits as the case may be.
You are supposed to get clean health certificate, you are expected to have undergone water purification and bottling training as well as obtain food handler certificate. You can also check up with your state or city to know if you will require a professional certification before you can be licensed to run your own energy drink production business.
But you can be rest assured that the industry is highly regulated and you are expected to meet the required standard as stipulated by the regulating establishment be it at local and national levels.
12. Get the Necessary Legal Documents You Need to Operate
The requirements for running an energy drink production company vary widely from country to country, state to state and from city to city.
For instance, in Toronto, Canada, some of the requirements for energy drink production business include business and liability insurance, a Commercial Vehicle Operator’s Registration for the truck, a food and drinks handler certificate, appropriate driver’s licenses for distribution drivers, assistant’s licenses for assistants, and a health inspection; proof of ownership, proper identification and vehicle license et al.
The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentations. If you do, it won’t be too long before the long hand of the law catches up with you.
These are some of the basic legal documents that you are expected to have in place if you want to legally run your own energy drink production business in the United States of America;
- Business and liability insurance
- Commercial Vehicle Operator’s Registration for distribution truck
- Food and drinks handler certificate
- Appropriate driver’s license for drivers
- Assistant’s license for assistants
- Health inspection Certificate
- Proof of ownership, proper identification and vehicle license
- Depot, commissary or service support facility meets vending unit operation needs
- Copy of license for the service support facility and/or a recent inspection report
- Tax Payer’s ID
- Fire certificate
- Plant insurance
- Certificate of Incorporation
- Business License
- Business Plan
- Non – disclosure Agreement
- Employment Agreement (offer letters)
- Employee’s Handbook
- Operating Agreement for LLCs
13. Raise the Needed Startup Capital
It is often said that money is the blood of any business. Raising start – up capital is perhaps one of the major concerns of entrepreneurs; it can be challenging raising capital to launch a business idea. Your idea must be workable and promising for you to secure finance from financial institutions or from angel investors.
The first thing to put in place before sourcing for start – up capital for your business is to draft a detailed business plan. With a good business plan, you can easily convince investors to invest in your business. The truth is that no bank can give you a loan if you don’t have a good and workable business plan.
Besides, investors will not take you seriously if you don’t have a business plan on ground before going out to source for start – up capital. Here are some of the options you can explore when sourcing for start – up capital for your energy drink production company;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell of shares to interested investors
- Applying for Loan from your Bank
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends
14. Choose a Suitable Location for your Business
When it comes to choosing a location for a business such as energy drink production company, there are key questions you should answer and key factors that must be considered.
You are expected to choose a location that is easily accessible especially as it relates to your distribution network and supply of raw materials et al. Affordability, availability of labor and safety are also some of the factors that you should consider.
Despite the fact that energy drinks are consumed by all and sundry, it is important to choose a location that will give your economy of scales; a location that will give you leverage to favorably compete in the industry as a new entrant and also to make reasonable profits et al.
Most importantly, before choosing a location for your energy drink production company, ensure that you first conduct a thorough feasibility studies and market survey.
The possibility of you coming across similar businesses that just closed shop in the location you want to open yours can’t be ruled out. This is why it is very important to gather as much facts and figures before choosing a location to set – up your own energy drink production company.
15. Hire Employees for your Technical and Manpower Needs
When it comes to starting an energy drink production company, then you should make plans to build a standard water plant.
A standard water plant includes a water borehole, effective water treatment and water purifying machines, bottling machines, a mini lab and good drainage system. You are expected to put all these equipment and machines in place and also purchase standard distribution trucks.
Although you can get fairly used of the above listed equipment and machines, but it is advisable to go for new and latest machines and equipment that can serve you for a long time most especially if you have the required money to make the purchase.
Even if you don’t have the required amount, you can enter into an agreement with the suppliers of such energy drink production machines and equipment and spread the payment over a period of time.
As regards acquiring a facility, if you have the required finance, it is to your advantage to acquire a property or lease a facility to be used for your energy drink production plant; it usually gives you the freedom to design the facility the way you want to it to be and install safety gadgets as you so desire. But if you are low on cash, then you don’t have any option other than to rent a facility.
When it comes to getting a workforce for a standard energy drink production company, then you should look towards getting qualified and competent people to fill the following roles; Chief Executive Officer (Owner), Plant Manager, Human Resources and Admin Manage, Merchandize Manager, Sales and Marketing Manager, Accountants / Cashiers, Production Workers/Machine Operators, Distribution Truck drivers, and Cleaners.
Over and above, you will need a minimum of 15 – 20 staff members to successfully run a small scale but standard energy drink production company.
The Service Delivery Process of the Business
Basically, energy drinks and most soft drinks are made at local bottling and canning companies. It is the practice for brand name franchise companies to issue licenses to bottlers to mix the soft drinks in strict accordance to their secret formulas and their required manufacturing procedures.
In general terms, the production process revolves around clarifying the water to be used, filtering, sterilizing, and dechlorinating the water, and then mixing the ingredients. The next stage is carbonating the beverage and finally, filling and packaging the energy drink in cans. We are not ruling out the fact that quality control is enforced at every stage of the production process.
It is important to state that an energy drink production company may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility; the above stated energy drink production company process is not cast on stone.
16. Write a Marketing Plan Packed with ideas & Strategies
Generally, running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch an energy drink production company, then you must go all out to employ strategies that will help you attract customers or else you will likely struggle with the business because there are well – known brands that determine the market direction for the energy drink production industry.
People and organizations will purchase and drink your energy drink if they know that they are going to get the best and of course value for their money.
As a matter of fact, your marketing strategy should center on quality and pricing, and above all excellent customer service. The truth is that if you are able to put the above stated in place, you won’t struggle to retain your old customers and at the same time win over new customers.
Businesses these days are aware of the power of the internet and which is why they will do all they can to maximize the internet (videos/YouTube) to market their services or products. In other words, a larger percentage of your marketing effort should be directed to internet users; your website will become your number one marketing tool.
These are some of the marketing ideas and strategies that you can adopt for your energy drink production company;
- Introduce your energy drink production company by sending introductory letters alongside your brochure to restaurants, hotels, bars, night clubs, corporate organizations, car owners, taxi companies, transport companies, households, sports organizations, gyms, schools, socialites, celebrities and other key stakeholders throughout the city where your energy drink production company is located and distributed
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
- Create a basic website for your business so as to give your business an online presence
- Directly market your products
- Engage in road shows in targeted communities from time to time to promote your energy drink production company
- Join local energy drink production company associations for industry trends and tips
- Provide discount days for your customers
- Advertise our business in community based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of Word of mouth marketing (referrals)
17. Work Out a Reasonable Pricing for your Services & Products
One key factor that will help you sell your energy drinks at rock bottom prices is to purchase your ingredients directly from wholesalers in pretty large quantities. The truth is the higher the quantity of items you purchase directly from wholesalers, the cheaper you tend to get them.
Another strategy that will help you retail your energy at the right price is to ensure that you cut operational cost to the barest minimum, and channel your efforts towards marketing and promoting your brand name. Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your products.
You can also try as much as possible to work with independent contractors and marketers; it will help you save cost for paying sales and marketing executives.
18. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
If your intention of starting an energy drink production company is to grow the business beyond the city where you are going to be operating from to become a national and international brand by opening chains of distribution network and franchising, then you must be ready to spend money on promotion and advertisement of your brand.
No matter the industry you belong to, the truth is that the market is dynamic and it requires consistent brand awareness and brand boosting cum promotion to continue to appeal to your target market. Here are the platforms you can leverage on to boost your brand awareness and create a corporate identity for your energy drink production company;
- Place adverts on both print (newspapers and food and drink magazines) and electronic media platforms
- Sponsor relevant community based events
- Leverage on the internet and social media platforms like Instagram, Facebook, Twitter, YouTube, Google + et al to promote your energy drink production company – brand
- Install your billboards in strategic locations all around your city or state
- Engage in roadshows from time to time in targeted neighborhoods to create awareness for your energy drink production company – brand
- Distribute your fliers and handbills in target areas
- Contact restaurants, hotels, bars, night clubs, corporate organizations, car owners, taxi companies, transport companies, households, sports organizations, gyms, schools, socialites, celebrities and other key stake holders throughout the city where your energy drink production company is located informing them about your energy drink production company and the flavors of energy drinks you sell
- List your energy drink production company in local directories/yellow pages
- Advertise your energy drink production company in your official website and employ strategies that will help you pull traffic to the site
- Position our Flexi Banners at strategic positions in the location where your energy drink production company is located
- Ensure that all your staff members wear your branded shirts and all your vehicles and trucks/vans are well branded with your company logo et al.