The founders of Boa are hoping their agave-nectar and lime-laced drink will appeal to Latino tastes and give them a toehold in the rapidly growing energy-drink market.
The Denver-based company, formed last year, has been successful in getting its green-and-black-clad cans shelf space in local Latino stores.
But Boa – and other small energy-drink manufacturers – face an uphill battle gaining brand recognition.
In 2005, four energy drinks – Red Bull, Monster, Rockstar and Coca-Cola’s Full Throttle – controlled more than 75 percent of the market, according to Beverage Marketing Corp., which provides research to the beverage industry. A pack of small players fought over a minu scule 2 percent share.
“It is difficult to get recognition. While the category is new, you have a small handful of entrenched brands, and energy-drink consumers look for them. The most successful smaller companies have to approach the market with a point of difference,” said Gary Hemphill, managing director of Beverage Marketing Corp.
Driven by demand mostly among young males, the energy-drink market is growing fast. Revenue for 2006 is expected to be $2.6 billion, up 60 percent from 2005, according to Beverage Marketing.
Troy Widgery, a former skydiver and founder of Denver-based Go Fast Sports & Beverage Co., already had a brand of sportswear and accessories when he launched Go Fast energy drink in 2002.
Brand recognition coupled with a relatively early entrance into the energy-drink market helped his drink survive.
“There are 150 new energy drinks a year in the U.S. If you aren’t already a player, you probably need about $50 million to make an impact,” he said.
Go Fast has also generated publicity with extreme stunts. Recently, the company catapulted a stunt man 350 feet into the air, where he opened a parachute and floated back to earth.
David Thomas, Victor Ibarra and Basil Sabbah, Boa’s founders, said they understand the difficulties their drink faces.
“We are not going to replace what is already out there but accelerate sales by offering something new,” said Thomas, 30, who got his start in the beverage business importing wine from Mexico, his homeland.
Ibarra, 34, is also from Mexico; Sabbah, 38, is from Ecuador. Ibarra started his career at Mexican beverage powerhouse FEMSA and has acted as a consultant on marketing to Latinos for Colorado brewer Coors. Sabbah is a petroleum engineer who once worked for Halliburton as a network compliance manager for oil and gas accounts in Latin America.
Each of the three men has invested in Boa, and they’ve located in a city of Denver enterprise zone, which qualified them for $130,000 in startup money, said Agnes Talamentez Carroll, chief executive of Cultura Business Communications, which helps entrepreneurs start or expand small businesses and aided Boa.
Plans call for Boa to grow here in Colorado, then move into four other states with large Latino populations – New Mexico, Arizona, California and Texas – within five years. Eventually, the founders hope the company will be attractive to larger companies looking for an acquisition, said Sabbah.
Growing locally and regionally will be easier than trying to carve out a niche in a national market, said John Sicher, publisher of industry magazine Beverage Digest.
“It is very difficult to get national distribution. If they have lined up good regional distribution and have a differentiated product and have good marketing, they have a shot,” Sicher said.
Latinos make up 24 percent of the energy-drink market, Thomas said, and demand for Latino food and drink has been growing.
Boa isn’t the first company with designs on Latino purchasing power. PepsiCo-owned SoBe targets Latinos with Fuerte energy drink; Coca-Cola offers them agave-flavored Blue Demon; and Caballo Negro, Uno and other drinks are also available.
But most of the drinks aren’t sold in Colorado, said Thomas. Other companies aren’t flavoring their drinks with Latinos in mind, he said.
Since launching in December, Boa has gotten shelf space in three major Latino grocery outlets in the Denver area: Azteca Ranch, Avanza and Rancho Liborio. It’s also in 90 percent of convenience stores in Latino neighborhoods. King Soopers and Albertsons in selected stores will be stocking it beginning this month, said Thomas.
To introduce the drink to consumers, Boa sets up tables at target stores and offers samples.
The three founders have two full-time employees and another 10 people who work on an as-needed basis. By the end of the year, Boa should have 10 full-time employees, Thomas said.
Staff writer Tom McGhee can be reached at 303-954-1671 or tmcghee@denverpost.com.
