Prime Hydration is a range of sports and energy drinks, created by famous influencers KSI and Logan Paul. Since its creation, Prime has experienced a rapid rise to fame through intense celebrity marketing, mass sales, and a complete takeover of the beverage industry. For example, Prime Hydration surpassed Gatorade to become the most-sold hydration beverage at Walmart in 2023, selling 1 billion bottles as of November 2023. This indicates a significant market share gain over its main competitors such as Gatorade. In late 2022 and early 2023, Prime prompted the sort of demand normally reserved for Travis Scott concert tickets or toilet roll in 2020 – all due to inelastic demand whereby a change in prices lead to a less than proportional change in prices. For example, the brand generated over $250 million in global retail sales in its first year and $45 million in sales in January 2023 alone. However, fast-forward to 2025, Prime’s sales have suffered – and according to The Grocer, in such a way that it was the largest loss of any food and drink brand. In this article, I will explore the factors contributing to this collapse, ultimately examining the balance of supply and demand, market equilibrium, and consumer behaviour.  

Background  

Prime endured marketing strategies that played a significant role behind its brand, e.g., celebrities, social media, and a strategic restriction of availability. Its unique selling points such as low sugar, electrolytes, and coconut water pitched to a young, health-conscious audience, creating a shift in consumer preferences. This quick fanbase obsession drove up demand, a classic demonstration of consumer surplus: consumers were willing to pay more than the product’s market price because they valued it highly. Coupled with a clever use of vibrant colours and formalised brand partnerships in the sports market, Prime’s effectively used advertising to create perceived scarcity, differentiating itself from competitors in a crowded beverage market.  

The Peak  

Originally supplied in the US, fans in the UK were unhappy and consequently desperate to get their hands on it – resulting in extortionate prices per bottle in early 2023. According to Business Insider, it described the situation as a black market emerging among kids selling the drink and how frenzied demand led to pre-dawn lines at stores and a resale market with markups exceeding 500%. This is a clear example of market disequilibrium, where the quantity demanded greatly outpaced the quantity supplied, driving up prices. The market was effectively out of equilibrium, with high prices reflecting scarcity while creating an incentive for consumers to engage in the secondary market, further inflating prices. The law of supply and demand suggests that when supply is low, but demand is high, prices increase, and Prime capitalised on this.  

A marketing expert in the BBC explained, ‘Limit the supply, and then you create the demand.’ This was a well-worded way of showing the public the way Prime Hydration was creating excess demand in the UK. He then went on to say, ‘This is called scarcity marketing. It’s a technique to encourage customers to make a purchase before the discount goes away or before there is a perceived limited supply.’ This strategy directly ties into economics psychology, where consumers are more likely to make impulse purchases or pay a premium when they believe the product is scarce.  

In this way, KSI and Logan Paul cleverly built up demand in the UK so when the drinks were finally available at stores such as Aldi, they sold out faster than ever believed possible. Aldi reported the drink sold out ‘in seconds’ when it hit shelves and had to be rationed to one of each flavour per customer. One Aldi staff member told PlymouthLive that their store had sold 360 bottles in under 6 minutes. Meanwhile, there was shocking footage of adults pushing young children in an Aldi in East London to try get hold of a few bottles. This behaviour is a clear example of consumer irrationality, where emotional factors such as fear of missing out (FOMO) impact purchasing decisions, pushing consumers to act beyond their rational decision-making. It also highlights the concept of inelastic demand—where the quantity demanded remains high even if price increases or availability decreases. In this case, consumers were so eager to obtain Prime Hydration that they were willing to pay inflated resale prices or act irrationally, showing that their demand was not sensitive to changes in price or effort required to purchase. 

The Economics Behind This Rise  

Bloomberg reported that in 2022, Prime’s sales were $250 million but in 2023, they skyrocketed – reaching $1.2 billion. This was a key example of Adam Smith’s supply and demand concept where this surge in demand outpaced supply, leading to shortages and driving up the product’s perceived value. As consumers scrambled to get their hands on it, prices remained high, and the brand capitalised on this momentary scarcity to build a sense of exclusivity. This scarcity-driven demand led to Prime’s high sales volume, as consumers were willing to pay a premium for the product in order to secure it before it sold out. The combination of inelastic demand and limited availability allowed Prime to quickly gain mass earnings.  

The concept of inelastic demand is crucial here: when demand for a product is inelastic, consumers are willing to buy the product regardless of price changes. For Prime, celebrity endorsements and perceived scarcity made consumers less price-sensitive. This strategy led to higher sales, showing how non-price determinants such as advertising, celebrity influence, and brand loyalty can shift demand curves.  

The Plunge  

This didn’t last long. Figures reported by The Grocer suggest that its 2024 first-quarter sales of £12.8 million are less than half of that of the £26.8 million worth of sales it made in the previous year. According to the Sun, in contrast to the scarcity Prime saw in 2023, pictures appeared all over social media of the drink being reduced to as little as 31p in Tesco, suggesting the demand for this drink has truly waned. Looking at 2024 as a whole, Prime’s sales declined by £63.1 million (from £131.1 million to £68 million from January to September) in 2024, making it one of, if not the, fastest falling brands in that year.  

The rationale behind this can be related to the demand curve, posed by Augustin Cournot. For Prime Hydration, the demand curve shows how much of the product consumers were willing to buy at various price levels. Initially, due to the hype from celebrity endorsements and limited availability, the demand was high, even at relatively higher prices, causing a rightward shift in the demand curve. As a result, Prime saw strong sales. However, over time, the novelty faded, and competitors entered the market, causing demand to drop. This shift caused the demand curve to move leftward, meaning consumers were willing to purchase less at the same price. As demand weakened, Prime’s sales and earnings declined. In response, KSI and Logan Paul have aimed to transition Prime from a hype-driven, limited-availability product to a sustainable, long-term brand by expanding retail distribution, investing in infrastructure, and forging strategic partnerships with major sports organizations like the UFC, Arsenal, and WWE. Despite these efforts, sustaining the initial momentum has proven challenging amid changing consumer preferences and increased competition. 

Conclusion  

In summary, Prime Hydration’s path to glory resulted from heavy, built-up demand coupled with celebrity influence that created mass earnings. However, the unsustainable nature of its marketing strategy—reliant on hype, scarcity tactics, and inelastic demand—led to its large decline in earnings. As the novelty wore off, Prime’s initial demand curve shifted, and sales fell drastically. Despite its initial promise, Prime’s lack of long-term differentiation in a competitive market contributed to its downfall.