BY BEN STEPHENSNutritional-supplement and energy-drink manufacturer Xyience may need wings if it is going to catch competitor Red Bull in the next three years. A company official thinks the brand may find its way there through a partnership with Ultimate Fighting Championships.
The Las Vegas-based company's Xenergy energy drink is ranked seventh in sales in the U.S., Xyience's vice president of business development David Stewart says, citing industry reports. While it is far from the company's "lofty goal" of being ranked second by 2010, Stewart said a young relationship with the mixed-martial-arts organization has catapulted the brand and faster than traditional ad campaigns would have.
More than two years ago, Xyience -- then mainly a supplement company, Stewart recalls -- approached the UFC to become a sponsor. The organization was familiar with its products. "It evolved into a handshake relationship, which eventually became contractual."
Xyience is now in its first year of a five-year contract, and has become the exclusive energy drink and supplement of World Extreme Cagefighting. WEC is a mixed-martial-arts organization which UFC's parent company acquired last November.
LESS SUGAR, MORE PROFITAlthough still producing supplements, Stewart said the company is focusing more on its no-sugar, no-calorie beverage "because that's where 85 percent of profits will come from." It's not the only drink maker looking to cash in, though.
In a billion-dollar industry where there are a lot of "me-too brands," Stewart contended -- without naming competitors -- that the strategic partnership with UFC helped Xyience establish itself. It didn't hurt that UFC hadn't gone mainstream yet, allowing a smaller company like Xyience to get in on the ground floor, he says.
"We created a barrier of entry before the UFC had really caught on," he recalled.
After the first match between UFC light heavyweight fighters Randy Couture and Chuck Liddell, Xyience took a risk and sponsored Liddell, who lost, going into the rematch. It turned out to be a smart business decision after The Iceman (Liddell) knocked out Couture. Xyience later capitalized on the fighter's success, running ads on ultra-masculine cable network Spike TV.
Xyience's "integrated, exclusive, indefinite, first right of refusal agreement with the UFC" has given it great placement on camera. Its name is plastered all over the octagonal ring in which the fighters duke it out.
Pay-per-view orders of UFC fights, each of which average "eight pairs of eyes," have reached more than 750,000 per fight, Stewart said, remembering it wasn't long ago when orders were around 100,000 per fight. Then again Xyience enjoys repeat exposure, making advertising nearly moot, Stewart says. One of the hottest selling DVDs at retail giant Wal-Mart are UFC events, viewed time and time again.
A GOOD BUZZThe company also had good placement on Spike TV's "Ultimate Fighter" -- the series credited with bolstering the sport's status. Looking forward, Stewart said the brand will have good placement when ESPN News broadcasts live coverage of the next UFC weigh-in.
Stewart admitted Xenergy is more expensive than many of its competitors' offerings, but said it is a quality alertness booster without a crash. "Xenergy isn't a 'get you wacked out' energy drink," he said.
Overall, sales of Xenergy were up 30 percent last month, Stewart said. The company is in the process of increasing the number of shelves the product reaches. According to Stewart, Xenergy had 10,000 accounts, or stores in which it is sold, as of 45 days ago. Currently it has 20,000 accounts, including deals with 7-Eleven and Kroger.
"Our goal by the end of the year is to be in 100,000 accounts," or almost half of the 220,000 existing accounts in the country, he said. "We wanted as close to 50 percent as we can."
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