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Energy Drink Firm Gets Boost From Knowing Market Best Up and Coming Small Business – Hip Hop Beverage Corp. By SHELLY GARCIA Senior Reporter June 21, 2004 James L. Robinson figures he has spent about half of the last year on the road. Such is the price of admission when you are trying to build a brand name in the energy drink sector where at least 200 rivals vie for attention. And when your marketing budget won’t even buy a house in many parts of L.A. “Most people thought we wouldn’t make it this long,” said Robinson, president and CEO of Hip Hop Beverage Co. in Pacoima. “But we’re still standing and fighting.” Owing to a good deal of grit and a helping of inventiveness, Hip Hop is also winning. The company’s energy drink Pit Bull has managed to gain national distribution at some of the nation’s largest grocery and convenience chains in spite of the competition. Hip Hop over the past few months has added a sugar free version of Pit Bull, something few competitors offer, and an energy bar. And in March, the San Francisco Chronicle rated Pit Bull the No. 1 tasting energy drink in a taste test of 17 such products that also included industry leader Red Bull, along with Pepsi’s Amp and Coke’s KMX. All that, despite the departure last July of one of the company’s partners, Calvin Ross-Thornton, who was instrumental in formulating Pit Bull energy drink, and a supermarket strike that took a big toll on the company’s revenues. Not to mention the relentless competition. “He doesn’t take no for an answer,” said Alene Gardner, an account executive with DPI West, which distributes Pit Bull to Food4Less stores, of Robinson. “He’s really persistent, but he’s not pushy and he knows the business.” Energy drinks, typically made with caffeine, guarana, ginseng and other herbs and vitamins, first entered the market about a dozen years ago when Red Bull brought its brand over from Europe. Since then, a growing number of twentysomethings have taken to swigging the elixirs for the extra boost they promise, and energy drinks have become one of the fastest growing segments of the beverage industry. So far, Red Bull has commanded the lion’s share of the market, about 60 percent by most estimates, but the escalating demand for these drinks has created an opportunity that’s sent scores of new manufacturers rushing into the market. Growing market Recent studies reveal that energy drinks now account for about $1 billion in sales, up from just $12 million in 1997. “It’s a good time to come into the market,” said Tom Pirko, president of Santa Barbara consultancy Bevmark. “It’s still a vibrant market.” Hip Hop formed in 1999 with Robinson, Ross-Thornton and Herb Hudson, the owner of Roscoe’s Chicken N’ Waffles restaurants, an L.A. landmark that now has five locations. Hudson is chairman of the company and, since Ross-Thornton’s departure, Robinson, a former music promoter, has picked up product development duties in addition to sales and marketing. Robinson declines to discuss the company’s revenues, pointing out that the supermarket strike that ended earlier this year derailed Hip Hop as it did many other small vendors. But Pit Bull’s account base has been growing steadily and now includes Safeway and its Vons and Pavilions units, The Kroger Co.’s Food4Less stores, 7-Eleven, New England chain Stop & Shop, and Supervalu’s Cub Foods in the Midwest, among others. While taste is critical, experts say, marketing has also become key to winning shelf placement at retail. “Once you get distribution, the key to retail is what are you going to do to support the brand,” said Robinson. “So many energy drinks hit the marketplace, the key is why should I take your brand over someone else’s and what are you going to do if I take your brand.” Aggressive marketing As a certified minority vendor, Hip Hop gets an extra shot to pitch to the grocery chains in addition to the twice yearly cattle calls the chains themselves hold for vendors who want a piece of precious shelf space. But in addition, Robinson has been aggressively working the industry trade shows and national conventions, and supplementing it all with an approach he calls guerrilla marketing. “We don’t have the luxury of having the advertising budget most people have, so we have to be very conscientious of every dollar,” Robinson said. “We can’t compete with the conglomerates.” Using what Robinson describes as a six-figure marketing budget, the company has gone after sponsorships at the kinds of events that cater to urban youth. Pit Bull is a sponsor at such events as the Ultimate Fighting Championship, a kind of extreme combat sport that combines jiu-jitsu, judo, karate, boxing, kick boxing and wrestling, featured on pay-per-view; the Los Angeles Avengers Arm Wrestling Challenge held at Staples Center; Dub Magazine car shows and this year, the NBA All Star game. The company also regularly supports local events like the Pacoima Christmas Parade and Food4Less’s Fiesta del Oro, a weekly tent event for shoppers. Hip Hop has also taken an aggressive bilingual marketing approach, printing its drink cans and its advertising posters in Spanish and English. “They know who their customer is, they know what their customer does, and they’re going after that customer,” said Gardner. “They’re very, very good at that.”

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