- It is estimated that the cost will be more than $400,000 for the startup capital of an energy drink business. (Source)
- The most common business types are Sole Proprietorship, Partnership, Limited Liability Company or LLC, and corporation. For LLC, formation packages are inclusive of registered agent services free for a year. You can hire an agent or do things on your own. (Source)
- Apply for a free Employer Identification Number (EIN) from the IRS for your taxes. EIN, also known as Federal Tax Identification, is like your Social Security Number for your company. (Source)
- The cost of processing permits, software, and legalities is estimated to cost $2,000. (Source) For information about local licenses and permits click here.
Energy Drink Startup Cost Factors
Wondering how much it costs to start an energy drink? The competition is tight for energy drinks, especially in the United States since there are already big companies that take up most shelf space. Don’t worry though; the key to an effective energy drink startup is in planning it right from the start.
You want to take note of these key factors that will affect the total costs of starting an energy drink business:
1. Raw Materials
Own Energy Drink is one of the few companies that extend help to create the unique flavor that you want for your energy drink brand as this unique flavor identity is crucial in your branding. They have in-house beverage experts who can help you in all aspects of drink creation. The estimated cost for this formula and testing development is $15,000.
Here are a few more companies that can help you get started in formulating the best energy drink there could be:
Choosing the right formula development company for you can lead to growing sales in the future.
2. Marketing Expenses
The estimated cost for marketing is $10,000. This includes promotional expenses, advertising expenses, grand opening expenses, and general marketing strategies.
Energy drinks have an intense and very competitive marketing field. You have to plan out your strategy if you want to stay in the business for good. Not only should the drink itself have a perfect formula, but marketing should also have the perfect ingredient to boost sales. These are the following things that should be considered:
- Crafty marketing strategies
- Network distribution nationwide
- Creative branding
- Easy-on-the-eyes packaging
3. Target Market
In any form of business, location is one of the key factors that you should think about. Establish your primary demographic or target market that is interested in your energy drink product. Knowing your market will also help create the ideal formula and the marketing drive to influence them.
Some examples of different marketing research methods are the following:
- Focus groups
- Field trials
- Surveys
4. Overhead Expenses
As the manufacturer, it is a must to have capital investments. Capital investments is defined as a sum of cash acquired by a company to pursue its objectives, such as continuing or growing expenses. It also refers to the acquisition of permanent fixed assets such as property, plant, and equipment.
Energy drink equipment, store equipment, and installation cost are estimated to be around $155,000.
5. Distribution
How are you going to distribute your product, especially if your manufacturer is located overseas? The cost of delivery for distribution is also included in the price of the product. Some of the examples are:
- Full container load
- Less than container load
- Airfreight
- Truck
- Expedited
- Bureau of Customs
- VAT or monetary exchange fees
The estimated cost just for the energy drink delivery van is $40,000.
6. Sustainability and Expansion Strategy
For your business to stay, you have to invest in research and ask for guidance and help from your consultants. Hiring them will help the sustainability and market health goals of your company. Also, with research, you may want to explore some factors that can expand your business.
The three factors to sustain and expand on are as follows:
- Product and service – This is one of the major sustainability goals of your company. Without this, there will be no profit; no profit means no business. Through research and consulting, you will be able to address different problems in the future while maintaining the uniqueness of your product.
- Employees – Employees who feel valued and are paid well are likely to stay for a long time. Constant upskilling and training could also break the monotony in the daily life of the workers. Them learning something new could increase their productivity rate.
- Customers – They’re the reason why your business is alive as they are the source of revenue. With the right research, you will be able to determine what they want and know the latest trend that could influence their liking of your product.
How to Start a Drink Company: Case Study
Conclusion
All in all, It is not easy to start any business as launching takes time and a lot of money. By considering the cost factors and studying the product before anything else with the right set of people at your side, starting your own energy drink business will be viable.
Hi, my name’s David. I started this pricing blog as a side project to help people figure out the best prices on common services. Whether you’re trying to figure out how much it costs to get scanning done at Staples or the expense to bleach short hair, more than likely I’ve blogged about it. Shoot me an email if you have any questions: david@mightyprice.com.