by Steve Karoul
Casino Innovation – Private Label Energy Drinks
By Steve Karoul
Casino innovation is rare these days in the casino industry. Unfortunately our industry has been labeled as a copy cat industry since we tend to copy more than we create. There is nothing wrong with that as long as it is legal and everyone benefits. However, there is still plenty of room for creativity and innovation in casinos. This month’s kudos for casino innovation goes to Mike Barlow, Vice President of Food and Beverage at Twin River Casino and the Twin River Casino management team. Mike and the executive team at Twin River Casino are the first casino management team to make an innovative decision to private label an energy drink for their casino.
It is an intriguing concept which required further investigation. It is quite amazing but the beverage industry in the United States alone is now a U.S. $60 billion per year industry. Energy drinks are the fastest growing segment of this market. Five years ago energy drink sales in the United States were only $12 million for the year. Last year, energy drink sales topped $1 billion and are increasing rapidly. That represents phenomenal growth for any industry.
So, why a private label Twin River Casino energy drink? According to Mike Barlow their casino currently gives away or sells a huge number of cans of energy drink every month to either customers playing on the casino floor or in their various restaurants or lounges. His investigation revealed that the energy drinks were being consumed by younger casino customers and also by their Asian casino customers. Both of these market segments are very high on their list of priority markets in their strategic marketing plan. They want to increase the percentage of younger players and have started to vary their entertainment as well in an effort to be more appealing to them.
They reviewed their current marketing offers designed to attract younger players along with many other variable factors and realized that they along with Asian players were the ones consuming high amounts of energy drinks both on the casino floor and in their lounges. However, the cost per unit of a can of commercial energy drink is quite high in comparison to a soft drink, a coffee or an alcoholic beverage. Mike remembered that five years ago if you walked into a casino and asked for a bottle of water that you only had two choices. Those two choices were either Perrier or Avian bottled water. Today if you go to just about any casino and ask for a bottle of water you will receive a bottle of private labeled water with the casinos name on the label. The concept of private label is both prestigious to be able to have your own brand but from a business viewpoint it is also extremely cost effective. Private label bottled water is considerably less expensive than Perrier or Avian.
This stimulated the thought process and the Twin River Casino management team concluded that if they wanted to increase casino business from both younger players and from Asian players that they had to give them what they wanted to drink which was energy drinks. The dilemma that they faced was that the current range of commercial energy drinks is very expensive. Mike did some research and found the leading company specializing in private label energy drinks. They do everything from custom developing the formula to designing the can label and artwork to incorporate the casino or company name and logo. The really interesting part that they learned was that the cost of private labeling your own top quality energy drink is substantially less expensive than commercial brands including the current market leading brand.
Therefore, the net cost savings to the casino from going private label will enable them to give away their own casino energy drink to anyone playing on their casino floor. They are very excited about this and have arranged several large promotions and special events to launch this new marketing effort targeting both younger players and Asian players. Many of the younger players also like to mix their energy drink with Vodka. Twin River Casino has partnered with Absolute Vodka which is considered to be one of the top Vodkas favored by their players for their new promotion. Their casino “energy drink” promotion will also incorporate many fun activities designed for a younger target audience of casino customers including food, music and various free giveaways to add to the excitement. This is also a perfect example of how a casino can involve outside sponsorships to help reduce their internal expenses and to maximize their promotion.
Asian players are different and are not viewed by the casino as big drinkers. Occasionally they will drink top name brandy or possibly a little wine but they are much more serious about their gaming. Therefore Asian players tend to consume energy drinks for a different reason. Top quality energy drinks such as the one developed for Twin River Casino contain healthy vitamins C, B-6, B-12, and Pantothenic Acid, Niacin as well as caffeine, Taurine, Guarana extract and Ginseng extract. In addition, the formula that Twin River Casino chose also uses crystalline fructose along with natural and artificial flavors. Doctors recommend Crystalline Fructose over all others because it is the slowest burning sugar available. Because of this it does not produce a sugar high followed by a sugar low. It produces more of a steady consistent boost in energy.
One concern that was initially surfaced by the casino related to their Master Contract with their soft drink distributor who pays the casino annual marketing support money for an exclusive on all soft drinks sold or given away in the casino. They learned that the contract does not pertain to any private labeled products developed by the casino such as their own private labeled bottled water. Therefore, after a detailed legal review, they elected to develop their own private labeled casino energy drink through a large independent producer.
Mike Barlow also commented that the entire energy drink phenomenon is very interesting and financially attractive to the casino. Casino management also felt that they would rather give a free Twin River Casino Energy Drink to their players that will keep them alert and hopefully playing longer than a free alcoholic beverage that may make them drowsy and lethargic and want to go home. The real true test will be to see if anyone can figure out and calculate how much extra play time on the slots or tables will result from serving complimentary energy drinks in the casino. The incremental play may even pay for the cost of the beverage. Casinos can have a lot of fun developing their own creative and innovative labels and names for their own private labeled casino energy drink. If anyone is interested in more information about private labeled energy drinks please E-mail me and I will send you additional information. Good luck and keep innovating.
Date Posted: 04-Mar-2008
Steve Karoul is one of the top casino marketing consultants in the world today with almost 30 years of experience with the best casinos both within the U.S. and internationally. Steve has lived in numerous countries and has conducted casino marketing activities in over 90 countries around the world. He is a contributing writer to several different major casino publications often injecting his own hands on experiences. Steve can be reached at Tel. (1-860) 536-1828 or by E-mail: firstname.lastname@example.org or www.euroasiacasino.com