Even though Rockstar wasn’t the first energy drink to hit the market, it didn’t take long for the brand to make a big impact in a crowded field. Consumers quickly responded to Rockstar’s affordable price and large serving size, which set the brand apart from more exclusive products like Red Bull. During its first six years, revenue at Rockstar soared as high as $405 million while it grew at an average annual rate of 103 percent.
By 2007, however, the sales bonanza started to fizzle. Over the last seven years Rockstar’s annual average growth has slowed to just 8 percent, placing it a distant third compared to rivals Red Bull and Monster. In fact, some convenience stores have simply stopped stocking Rockstar altogether, a fact that upsets founder and CEO Russ Weiner to no end. As the driving force behind the brand’s glorious early days, Weiner’s business savvy won him a fortune valued at $2.5 billion. Still, many also blame the company’s current stagnant state on its founder’s caustic attitude and frugal marketing strategies. After all, if Rockstar had continued to grow at a rate similar to its competitors, Weiner’s net worth would have increased by several billion dollars more.
Instead, the company lost both market share and some important partnerships thanks to its CEO. For instance, in 2005 Weiner managed to broker a big distribution deal with Coca-Cola. The deal soon went sour, though, as Weiner admits he’d get into screaming matches with his partners at Coke over strategy. By 2009 the deal had died, leading Rockstar to a less flashy contract with Pepsi along with a 5 percent drop in sales. Former employees also point to Weiner’s miserly ways with marketing as a reason for the brand’s decline. While Monster diverts 8 percent of its sales to advertising, Rockstar spends just 4 percent of its revenue on promotion. As a result, Monster has a market valuation worth $18.3 billion, more than six times Rockstar’s total value. If Weiner wants to put his brand back in the spotlight, he might need to follow his competitors’ lead rather than his own.
- What appears to be the major problem that affected Rockstar?
- Can the company regain its growth and former status in this competitive market?
Source: Abram Brown, “Is the Party Ending for Rockstar Energy Drinks and Its Billionaire Founder?” Forbes, December 29, 2014. Photo by: Katie McKeown.