Mumbai: Sachiin Joshi, vice-chairman of JMJ Group, which has interests in real estate and hospitality, has spent a hectic few months since the launch of its energy drink brand XXX in 30 cities earlier this year.
The brand was associated with Kolkata Knight Riders, the Indian Premier League (IPL) team co-owned by actor Shah Rukh Khan, when the quick-format cricket tournament —defined by its power hitting—was being played across India in March and April.
On a high: Cloud 9, which has been primarily associated with cricket, is among the brands such as Red Bull, Power Horse, Burn, Romanov Red and XXX that have flooded the Indian market.
XXX has since become the lead sponsor for the Commonwealth Boxing Championship, part of the Commonwealth Games to be played in New Delhi in October. Joshi is now on the hunt for adventure sports to tie up with.
“It’s a bit of a challenge,” said the 26-year-old, who is exploring the idea of launching fight nights, modelled around the Ultimate Fighting Championship in the US.
High-voltage sporting action lends itself to energy drinks, and beverage makers are keen to exploit this natural association to promote their brands.
Red Bull, from Red Bull India Pvt. Ltd, intends to launch the Red Bull X-Fighters Jams exhibition tour, a competitive exhibition version of the global Red Bull X-Fighters property.
“It involves stunt bikes,” said Rohan Vyavaharkar, national communications manager at Red Bull India.
Red Bull Air Racing, its world championship and cliff diving event, will also come to India by 2011-12. Globally, the brand is associated with adventure sports such as Formula 1 and Alpine skiing.
Like Red Bull, JMJ wants to create a market for extreme sports through XXX. “We are keen to set up a winter sport like skiing,” said Joshi.
The energy drink market in India is worth nearly Rs250 crore and growing 40-50% annually, according to the estimates of Ashish Nanda, partner (retail and consumer products practice) at consultancy firm Ernst and Young India (E&Y).
The market is flooded with brands such as Cloud 9 from Goldwin Healthcare Pvt. Ltd; Power Horse of Austria’s Spitz KG, locally owned by Power Horse India Pvt. Ltd; Coca- Cola’s Burn, launched late last year; and Romanov Red from the UB Group, launched this year.
Indian consumers drink an estimated 120 billion litres of beverages, of which only 4% are ready-to-drink packaged ones. This shows there is a lot of scope for growth for the packaged ready-to-drink segment.
“There seems to be a growing acceptance from consumers, and it’s only natural to see more players jump into the fray,” said E&Y’s Nanda.
Cloud 9 is keen to sponsor the cricket World Cup 2011 and the next season of IPL, said Priyesh Ganatra, chairman and managing director of Goodwin Healthcare, which will be a Rs200 crore firm by 2012.
So far, Cloud 9 has been associated primarily with cricket, sponsoring the Chennai Super Kings team during IPL 2009, the India-Australia series in October and the India-South Africa series in February.
“Our investments in cricket have paid off. We got huge mileage because of Sachin Tendulkar’s double century in the India-Australia series,” said Ganatra. “We applauded his success through hoardings later. It was greatly beneficial in brand recall.”
But revenues will depend on more than just hooking up with popular and adventure sports. “The biggest challenge for this sector would be to ensure that its distribution system is flexible enough to cater to spikes (in demand),” said Nanda.
Hiren Pandit, managing partner (entertainment sports partnerships) at Group M, said Red Bull’s global success on the back of extreme sports meant it was natural for other firms to copy this strategy.
But this may not always be the right move. Indians, for instance, are not too fond of extreme sports. “Apeing international brands is perhaps not the best way to go,” Pandit said, adding that the challenge for most energy drinks would be to find a niche of their own.
Nanda said they could look at opportunities beyond sports. “As the market grows, one would see these brand filtering into other areas such as fashion, lifestyle, etc. The strategy should be to cover as many consumption occasions as possible to build sales,” he said.
Romanov Red from United Spirits Ltd is focused on sports and music-related activities, said business head Debashish Shyam. “Besides owing a team, we’ve also been part of sampling and promotional associations with other teams,” he said.