Go-To-Market Lessons: The Cautionary Tale Of Prime Energy Drink

In 2022, a new product took the energy drink market by storm: Prime energy drink. Prime, introduced by Youtubers Logan Paul and KSI, sold over $377 million in 2023. Demand was so high initially that opportunists were re-selling the product for up to $100 per bottle.

Yet that initial success was short-lived. The product had no existing loyal customer base, and Prime is now frequently found in bargain bins and at reduced prices.

The rapid rise and fall of Prime is part of a new kind of business model, one based more on internet personalities than on the products being sold. There is a lot to learn from Prime’s quick rise to fame and short-lived success.

Let's dive in!

The Brains Behind Prime Energy Drink

KSI and Logan Paul are influential figures in the online world, known for their massive followings and entrepreneurial ventures. Logan Paul is an American influencer, wrestler, and entrepreneur. He first rose to fame on Vine in 2013 and now runs a YouTube channel with over 23 million subscribers.

KSI—which stands for Knowledge, Strength, and Integrity—is an English influencer, boxer, and entrepreneur. His primary social media platform is also YouTube, where he has over 24 million subscribers on his channel.

Both personalities are similar in terms of their platforms, audience, and content. Both practice martial arts, and are serial entrepreneurs.

Logan Paul and KSI have a history of collaborating in the past, including their widely publicized 2018 boxing match, which ended in a draw. For them, it was probably a no-brainer to collaborate on launching an energy drink brand.

Bubbles and Perceived Scarcity in Supply

Capitalism runs on scarcity. In the long term, prices are determined by supply and demand. In the short term, prices are determined by perceived supply and demand. Prime used a technique called scarcity marketing to create high perceived demand.

When people believe that a product is scarce, but highly sought after, they are often willing to pay more for it, often in the hopes of selling it for more later. This leads to the vicious cycle we call a bubble.

Whether a bubble is made out of tulips, beanie babies, subprime housing, or legally non-binding electronic receipts, some people can make a killing in a very short amount of time. But eventually, all bubbles burst, and the value of the product returns to where it naturally belongs.

Much of the initial success of Prime was due to the hype bubble it created. There was so much perceived demand that people were selling cases on eBay for outrageous markups. Prime employed scarcity marketing tactics, deliberately limiting product availability to fuel a sense of exclusivity and desirability.

Normally, a product launch doesn’t create an overnight hype bubble, because most products start small. However, the creators of Prime were able to create high perceived demand due to their wide reach on social media.

The Role of Social Media

For high-ranking influencers, social media presents a gold mine of opportunities in digital marketing. They can put a product in front of millions of people at the click of a button, at no additional cost to themselves. That gives them a go-to-market strategy like no other.

Prime's success is a prime example of effective influencer marketing. By leveraging high-profile personalities like Logan Paul and KSI, Prime created a marketing spectacle that resonated with sports enthusiasts globally, transforming a pre-existing boxing rivalry into a captivating narrative for promoting their hydration drinks.

This makes it easier than ever to create rapid and short-lived bubbles of interest around a particular product. Instead of spending years developing awareness around a product, influencers have spent years developing awareness around a personality. They then transfer that “awareness capital” from themselves onto a product, leading to high overnight demand without an existing customer base.

This upends some traditional norms about marketing. The product itself becomes secondary, and need not have lasting value in and of itself. Instead, influencer entrepreneurs often benefit from the explosive effects of short-lived and rapidly hyped products, one after another, disseminated widely across social media platforms.

Success or Failure?

Prime is still available in stores today, but it is frequently marked down, and nobody expects to get more than its market value, as adjusted by actual supply and demand. Compared to other global sports drinks, Prime's market presence and longevity are still in question.

It’s hard to say that Prime was an outright failure. Sales of the product were massive and rapid, earning over $250 million in retail revenue over its first year.

On the other hand, it’s hard to consider Prime a business success story like its competitors, such as Monster and Red Bull. Those brands have earned long-term brand loyalty and cultural awareness through decades of careful marketing and advertising. Sales of Prime slumped dramatically after the first year, and show no sign of picking up.

One could compare the sales of Prime to the drink itself: containing about four times as much caffeine as Coca-Cola, drinking a bottle would induce a massive energy rush, followed by just as massive a crash. Indeed, it is hard to see a product with such volatile effects as having anything but short-term success. Long-term consumers would have to be comfortable with its highs and lows.

In hindsight, Logan Paul and KSI probably got the results they wanted. Their history of rapid entrepreneurial schemes indicates a new and increasingly popular type of marketing strategy: fast growth and high revenue, fed by instantaneous influencer communication, with little planning for long-term customer loyalty.

Some back-of-the-envelope calculations reveal how this approach works:

• Together, Paul and KSI have about 47 million subscribers. Many of those subscribers overlap, so let’s say they have a combined 30 million people at their fingertips.

• A single bottle of Prime costs about $2. Given their retail revenue numbers, this means that about 125 million bottles were sold.

• That comes out to about 4 bottles per subscriber. Not every subscriber will have purchased a bottle, but many non-subscribers will have purchased a bottle.

Four bottles per subscriber over the course of a year is not a whole lot, especially when you consider the fact that some drinkers were probably “whales” who bought entire boxes at once, while most bought only one or two bottles for the entire year. Compare this with a loyal drinker of Monster or Red Bull, who might drink 4 bottles per week. Also, given that much of the early sales were driven by a hype bubble, the actual number of bottles consumed might be even less.

Keep in mind that these numbers focus only on revenue. We don’t have any info about the cost of production. Paul and KSI probably made millions off the product, but not nearly the whole $250 million.

The best way to interpret this story is this: Prime was not the real product. Logan Paul and KSI’s real business model has always been and always will be their internet personalities. Prime was intended to build off of and enhance their images. In this sense, it is somewhat misleading to compare it to traditional energy drinks, which are standalone products in their own right.

What This Means For Ordinary Businesses: Marketing Strategy

If you happen to be an influencer with millions of subscribers, you might just be able to launch a new product without carefully considering its underlying value, doing responsible market research, or performing years of diligent marketing. Identifying a key target audience is crucial for effectively reaching and engaging with potential customers.

If you are like most people, however, you do not have the ability to talk to 30 million people at the click of a button. You are more likely to succeed via the traditional route: developing a valuable product, making sure it has a market, and honing in on a well-thought-out go-to-market strategy. Influencers creating their own brands have shown how authenticity and relatability can forge genuine connections with consumers.

Are you looking to launch a product or grow your business with a tried and trusted go to market strategy?

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