CSNC EXCLUSIVE: Q&A with Stefan Kergl on how El Jefe will be "the boss" of energy drinks
CSNC has a sneak preview of a new line of energy drinks that will be making its Canadian debut in mid-June. We spoke with Stefan Kergl, the vice-president of Beverage World and The PoP Shoppe about what the sugar-free El Jefe and El Jefa energy drinks can bring to the convenience store shelves and the energy drink beverage category.
El Jefe energy drinks won the 7th annual “Colored by INX Can Design Contest” this year for their can design, which features Day of the Dead imagery of skeletons dressed in formal wear. “Fuel for the fearless” is the brand messaging that conveys confidence in a brand that is entering an already saturated market.
CSNC: What would you say to a convenience store owner who already carries the major drink brands, and they might be hesitant to add another SKU?
SK: I believe the energy drink category only dipped for one year, and that was in and around the pandemic or coming right out of the pandemic. Statistically it's not even slowing down this year.
Energy continues to be the driving force and growth for convenience. When we go to a convenience store, we're data driven: Consumers are looking for new innovation, exciting beverages. That's why Monster, Rockstar and Red Bull and all those guys continue to innovate with new new flavours.
CSNC: What is the difference between El Jefe and La Jefa?
SK: El Jefe is more in ranks with Ghost Energy, Monster Energy or Rockstar Energy Drink. When La Jefa launches in the fall, the target market will aim towards a Bloom or an Alani Nu customer.
The ingredients are very similar. El Jefe is throwing in 150 milligrams of caffeine, which is below the 180 milligrams regulated by the CFIA. The difference really comes down to flavour profile, where La Jefa’s are different than that of El Jefe, that really basically is about it. Both are zero sugar.
CSNC: A lot of energy drinks do base their flavour profile around sugar, so it is interesting that this energy drink is a zero-sugar option. What flavours can Canadians expect to see?
SK: For El Jefe, it's going to be Sinister Raspberry, Zuma Watermelon, Diablo Punch, and Wild Mango. La Jefa literally, within the last two weeks, just launched in the United States. We're going to launch La Jefa probably in the fall after they determine what their top sellers are.
Selling through shelf impact
CSNC: How important are impulse purchases to the brand?
SK: When people see a new product, a new energy drink in the cold vault with all those other guys, we're gonna get that impulse buy. We know it based on the beautiful packaging that El Jefe is in right now:
The packaging gets you the first sale. It’s the flavour profile that gets you the second sale.
CSNC: What merchandising support will convenience stores receive? What would they get in terms of merchandising and promotion?
SK: Static clings, five shelf corrugate displayers. I think also for tangible promotional gear there will be t-shirts, and we’re going to be doing hats. As for promotions, we’ll do the “buy X, get Y” deal—either a free case or a t-shirt, or what have you. I also wanted to make note that we have invested in a few cargo vans, which you will see in the Montreal marketplace, in the Toronto marketplace, and we're trying to finalize if we're going to have the Calgary, Edmonton and Vancouver markets as well.
Why Canada matters
CSNC: How important is the Canadian convenience channel to your overall growth strategy?
SK: Huge! We're going to start with single-serve, so the product will be 12 units in a case, and then afterwards we would go to four-packs for convenience, and then grocery, and eventually we would probably go to a club pack. There's not a lot of clubs in Canada, but I can already state that one of them has reached out to us. I don't think we want to immediately go that route. I think what we wanted to do is we want to build up the single serve business, specifically the convenience channel.
Canadian jobs are important: We are manufacturing this product in Canada. Yes, some of the raw materials are going to be imported, such as aluminum cans, but the manufacturing aspect and the concentrate aspect are going to be Canadian.
CSNC: With regards to distribution of supply chain, how are you approaching inventory management and replenishment during the launch phase?
SK: We have Pop Shoppe, where we facilitate glass out of the United States, because we have very few to none Canadian manufacturers of glass. We need to be “elbows up.” We already source aluminum cans from the key manufacturers in America; again very few producers of aluminum cans, specifically 473 ml, and I know of two plants: One in Ontario, one in Quebec. They're pretty much wrapped up with Coke, Pepsi, and Red Bull.
Whatever local raw materials we can source locally, we will. We're manufacturing here in Canada, so if tariffs come back into play like they did earlier last year, the Canadian consumer will be burdened less than if we were going to to import the product as a whole as a CPG.
Competing in an oversaturated market
CSNC: What types of merchandising drives traffic for energy beverage brands?
SK: Corporate franchises have programs for store signs or pole wraps for their stores. For the independents, we may look at exterior signs, front of store displays, as well as second point of purchase chilled in the cold vault.
El Jefe favours street-level promotions over major experiential activations. You will see it in the Toronto marketplace, and we're trying to finalize if we're going to have Calgary, Edmonton as one or Vancouver. you'll see El Hefe vans up and down the street…we've already locked up vans from Montreal and Toronto, the artwork is done.
CSNC: Are independent convenience stores a priority, or will the initial focus be largely on chains?
SK: It'll be both. Beverage World also has a network of distributors outside of corporate convenience, regardless if its national, regional, or independent. As soon as the product is available, you know they will be able to buy it and sell it to independents. We have national distribution reach through our network, but it's our job also internally to hit all the corporates.
CSNC: Where will El Jefe sit from a retail price perspective compared to leading energy drink competitors?
SK: We want to be the same price as Monster or Rockstar. Whatever the 473 ml costs it'll probably range between CA$4.49 and CA$4.79.
CSNC: Are there any experiential or grassroots marketing campaigns that are planned for its launch in June?
SK: Beverage World does trade shows, we do consumer shows, but most of those are done in the fall, and the summer. There is no grassroot marketing, other than wrapping vehicles, and giving product away up and down the street: that’s grassroot marketing that we're looking at right now.
CSNC: If we were to revisit this conversation two years from now, what would you want stores to say?
SK: That the brand was successful, that it lived up to it’s logo: “Fuel for the Fearless.” No risk, no reward: That's the way that El Jefe is marketing their brand and we're following suit with them.
