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Bridget Piper
Mr. Posner
p.5
1 January 2011

Four Loko

Production

Four Loko’s are alcoholic energy drinks made with guarana, taurine and caffeine. (Nowpublic.com)It has about a 12% alcohol volume, four times more then a beer. (Foxnews.com) Guarana is a berry that is crushed into a powder those posses mostly the same effects as caffeine. In a pure form it can be sold any were from ten to a hundred dollars depending on the type and the product. (Guananapure.org) Taurine is an amino sulfuric acid found in the human body. It can also be found in plants an example being fungi. ( Wisegeek.com) for 3mgs of Taurine the price ranges from twenty cents to fifty cents. (Drumlib.com) Caffeine is produced in leaves and plants and is also artificially made. (Kidshealth.org) 46 mg of caffeine cost about twenty cents. (absoluteinsight.net) other substances such as water and sugar are part of the Four Loko formula.
Marketing
Four Loko drinks are made in factories then loaded onto trucks and distributed to gas stations and stores just like every other drink or food product would be. They are placed in the fridges displayed for costumers shopping for an alcoholic drink. Consumer’s attention is caught by the bright colors on the can and the low price of the drink. At some gas stations and stores poster are hanging in the windows advertising four loko’s. In marketing of the drinks there is a team of people who work for the company who spend time trying to find better ways to get people to buy the drink but the main job is in the hands of the store keepers. Were the drink is placed, how it is presented and advertising in the store for it is all up to them.
Pricing
A can of Four Loko cost about $2.50 at a local convince store (USAToday.com). This price is inflated from the cost it actually is to make the product. Essentially Four Loko’s are made out of energy drink such as Red Bull, Monster, and Rockstars. Mixed with Malt liquor. Energy drinks tend to cost more then a can of Four Loko but how much do they cost to produce? Much less then there shelf price. A malt liquor on average cost about $1.95 on the shelf. So if Four Loko is simply a mix of these two products then the low shelf price is quiet a bit more then it actually costs to produce the liquid. The sales tax on all alcohol products are pretty high to discourage people from drinking and to cover the damages that can occur from drinking. This tax is called a sin tax. In California the sales tax on alcohol is .20 per gallon in other states in The United States it is different. (Taxfoundation.org) this is the government’s way of regulating and discouraging people from drinking. Also the drink is illegal to sell or be consumed by anyone under the age of twenty one so the price of the product is targeted towards young adults and based on the income they make.
Consumer Demand
Most common consumers of this product are young adults. In general young adults between the ages of 18 through 25 the rate of binge and heavy drinkers is two times more then the general public. (Alcolholism.about.com) This drink is cheap and hits the drinker fast and hard. It is not a normal product were when a person earns more money they consume more of it, like a car or a home. This product is not required for the functioning of ones life unlike food and shelter. It is a relatively elastic product except for the fact that there are people who develop addictions to alcohol and in there minds require the consumption. There are many substitutes for Four Loko’s proving its elasticity. The major demand for this product it dependant on its price, the ability of the society to purchase it and the governments regulations upon it.
Other Factors