RED BULL GMBH IN SOFT DRINKS (WORLD) - April 2013
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RED BULL GMBH IN SOFT DRINKS (WORLD) April 2013
SCOPE OF THE REPORT
Scope
This global profile focuses on the industry trends in soft drinks. Disclaimer
Much of the information in this
All values expressed in this report are retail/off-trade in US dollar terms using a briefing is of a statistical nature and,
fixed exchange rate (2012). while every attempt has been made
to ensure accuracy and reliability,
2012 figures are based on part-year estimates. Euromonitor International cannot be
held responsible for omissions or
All forecast data are expressed in constant terms; inflationary effects are errors.
discounted. Conversely, all historical data are expressed in current terms; Figures in tables and analyses are
calculated from unrounded data and
inflationary effects are taken into account. may not sum. Analyses found in the
briefings may not totally reflect the
SOFT DRINKS companies’ opinions, reader
discretion is advised.
OFF-TRADE RTD VOLUME
534.8 billion litres
While Red Bull remains the
Bottled Water world leader in energy drinks, it
is facing growing competition
192 billion litres
from other players. TCCC in
Sports and particular, with Monster in the
Fruit/Vegetable Bottled
Sports and Energy Drinks
Carbonates Energy US and Burn in Brazil, is also
Juice Water 15 billion litres posing an increasing threat.
169.5 Drinks
62.0 billion 205.1 billion These two markets are emerging
billion litres 16.2 billion as energy drinks battlegrounds
litres litres Concentrates
litres and the implications are
43 billion litres considerable for Red Bull’s
ability to remain the number one
ranked player.
Concentrates RTD Tea RTD Coffee
43.7 billion 30.1 billion 4.5 billion
litres litres litres
© Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 2
STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS
STRATEGIC EVALUATION
Red Bull a pioneer in its category
The privately-owned Austrian Red Bull GmbH
company Red Bull’s core business is
energy drinks. Dietrich Mateschitz Headquarters: Fuschl am See, Austria
and Chaleo Yoovidhya each owned a Regional involvement: Global
49% stake prior to 2012 when Mr
Carbonates, sports and
Yoovidhya passed away. Mr Category involvement:
energy drinks
Yoovidhya’s son Chalerm holds the
World soft drinks share by off-trade
remaining 2%. While Mr Yoovidhya 0.2%
RTD volume (2012):
was alive he acted as a silent
partner. World soft drinks off-trade RTD volume
12.4%
growth (2011-2012):
Red Bull has created the global
market for energy drinks, and the
pioneering Red Bull brand has
became synonymous with energy
drinks for a large number of
consumers. Red Bull remains bullish
and ambitious in their corporate
brand. Despite rising competition,
Red Bull continues to comfortably
lead the global energy drinks market
in both volume and value terms.
However, the threat from The Coca-
Cola Co (TCCC) has been mounting.
© Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 4STRATEGIC EVALUATION Red Bull continues to see strong net sales growth Red Bull operates many other businesses aside from energy drinks The company owns and manages a construction company, football clubs, youth academies and TV broadcasting and recently online clothing (Red Bull label only) sales. Additional media products include print magazines about football, motor racing, celebrity gossip and lifestyle. The company has even ventured into the mobile phone service business in Austria, Hungary, Switzerland and South Africa. As a privately-held company, financial information is limited however the company reported Red Bull reported exceptionally strong net sales growth in South net sales of €4.9 billion in 2012 Africa (+52%), Japan (+51%), Saudi Arabia (+38%), France (+21%), and 5.2 billion cans sold, the US (+17%) and Germany (+14%). Red Bull cited efficient cost representing growth of 15.9% management and ongoing brand investment as underpinning its and 12.8%, respectively. growing profitability. © Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 5
STRATEGIC EVALUATION
SWOT: Red Bull GmbH
STRENGTHS WEAKNESSES
Category leader Broad geographic Category limitations Controversial
presence
Red Bull has Red Bull has a broad In overall soft drinks, The relatively high
established a strong, geographic presence, Red Bull has a limited caffeine content of Red
consistent brand image which should ensure product portfolio Bull makes the brand
(an independent, edgy positive long-term compared to the rising highly vulnerable to
brand) globally. Red Bull growth even if certain number of rivals with a regulatory control.
is synonymous with markets reach maturity. plethora of flavour
energy drinks in many variants and categories.
countries.
OPPORTUNITIES THREATS
Emerging markets New production Competition High marketing costs
Emerging markets Red Bull is building a new Monster represents the Market maturity in
represent newer production facility in Brazil biggest threat to Red developed markets will
geographies for Red which is likely to make its Bull as it contains make marketing to its
Bull’s expansion. retail price more natural ingredients, core consumers harder
Accelerating the competitive than imported which seem more than in the past.
marketing and product prices. Building a desirable than Red Bull Constant communication
sponsorships in these site in Asia should also be for some consumers. with consumers means
markets is a wise move. considered. high marketing costs.
© Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 6STRATEGIC EVALUATION
Key strategic challenges and objectives
It is not easy at the top Red Bull stands up to health regulators
Red Bull’s success has attracted considerable While health officials continue to voice concerns
interest from soft drinks multinationals, TCCC and over energy drinks and the category remains under
PepsiCo. TCCC in particular has been successful threat from stronger regulation, energy drinks has
at leveraging its distribution network to launch seen relatively little impact in terms of sales. To
Burn across many markets and to back Monster. some extent this has added to the category’s
Burn is a major threat to Red Bull in Brazil while in “edginess” attracting young consumers and
the US Monster has overtaken Red Bull in off- generating consumer interest. There is little risk of
trade volume sales terms. Red Bull will need to
Red Bull reformulating its product to cater to health
find ways to hold onto its number one ranking
concerns and instead the company insists that its
globally in energy drinks and stave off this
competition. products do not pose a health risk.
Will premium work in emerging markets? Red Bull breaks with tradition in 2013
Red Bull has consistently maintained its premium In 2013, Red Bull, for the first time in 15 years
positioning from its slimline metal cans to its price added new products to its energy drinks range.
differential versus brands such as Monster. While Edition is a range of three new flavours and thus
this strategy has reaped dividends in the mature far available only in the US market. The likelihood
markets, it remains to be seen if it will sustain however is that this range will be rolled out to other
growth in the emerging markets. Brazil with its markets. The move is a response to growing
large population of lower-income consumers may competition. Success for this launch will be crucial
pose a challenge giving cheaper brands such as to the company’s growth prospects in the mature
TCCC’s Burn a competitive advantage. markets.
© Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 7STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS
COMPETITIVE POSITIONING Red Bull performance wanes towards end of review period Red Bull underperformed the overall energy drinks market in 2011-2012. While the company’s market share of the energy drinks market in the US increased in 2012, the market’s growth rate overall began to wane. Red Bull remains heavily dependent on the US for its global growth. Weakness here is reflected in the company’s weakening global performance in volume terms. The company however continues to enjoy the position of number one ranked player in energy drinks globally with a 21.4% market share. In terms of absolute volume growth however, the US remained Red Bull’s key growth engine in 2011-2012 reflecting growth of 96% over 2007-2012. Brazil came second in terms of absolute volume growth expanding by 608% over the review period or 48% CAGR. This market was a particular focus for Red Bull with the company sponsoring various sporting events in order to raise the brand’s profile. © Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 9
COMPETITIVE POSITIONING Red Bull faces mounting pressure In value terms, the company’s performance was stronger in recent years although even in value terms the company’s performance fell below that of the energy drinks market overall. The energy drinks market has attracted a number of other players including Monster Beverage Co, and The Coca-Cola Co (TCCC) which marketed it own brands in the category including Burn as well as engaging in a distribution alliance with Monster Beverage Co. PepsiCo had a modest presence in energy drinks with its brand Sting; however like TCCC it maintained its own alliance, with Rockstar Inc. Red Bull’s sister brand non-carbonated Red Bull remains owned by TC Pharmaceutical which led the energy drinks category in China and was present in Thailand where it ranked second. TCCC’s Burn was a stronger performer in Latin America over the review period, though Red Bull continued to lead the category. © Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 10
COMPETITIVE POSITIONING
Top 10 players in soft drinks by off-trade RTD volume share
Soft Drinks: Global Top 10 Companies by Off-Trade RTD The only significant movement in rankings to
Volume, Rank 2007-2012 and 2012 Share have taken place over 2007-2012 was the
split by Kraft into two separately traded
2007
2008
2009
2010
2012
2011
% company
Company entities, which pushed Mondelez into the top
share 2012
five based on its strong presence in
Coca-Cola Co, concentrates. In market share terms, TCCC
1 1 1 1 1 1 21.2
The maintained a large gap between itself and
PepsiCo Inc 2 2 2 2 2 2 9.9 PepsiCo. Indeed, the gap between the two
Danone, Groupe 3 3 3 3 3 3 4.7 widened slightly over the review period.
Nestlé SA 4 4 4 4 4 4 3.7 PepsiCo’s recent focus has been on the
development of its snacks business and on
Mondelez
International, Inc
- - - - - 5 2.0 developing a “better for you” range of
packaged foods, hence possibly neglecting
Ting Hsin
its soft drinks business.
International 7 7 7 6 6 6 1.6
Group TCCC has been active throughout the review
Dr Pepper period moving beyond its core carbonates
- 6 6 7 7 7 1.5 base to fruit/vegetable juice, RTD tea, bottled
Snapple Group Inc
water and sports/energy drinks.
Anheuser-Busch
- 33 31 30 29 27 0.2 Red Bull as a premium player ranked much
InBev NV
farther down in RTD volume terms. The
Red Bull GmbH 48 41 40 37 34 28 0.2
brand is also heavily reliant on the impulse
Otsuka Holdings rather than grocery channel thereby
- 32 33 32 32 29 0.2
Co Ltd discouraging multi-pack sizes.
© Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 11COMPETITIVE POSITIONING
Top 10 players in soft drinks by off-trade value share
Soft Drinks: Global Top 10 Companies by Off-Trade Value, Danone’s volume share is significantly
Rank 2007-2012 and 2012 Share higher than its value share, due to its large
volume sales of low-priced bottled water in
2007
2008
2009
2010
2012
2011
% company emerging markets, notably Aqua (Asia
Company
share 2012 Pacific) and Bonafont (Latin America).
Coca-Cola Co, The 1 1 1 1 1 1 26.2 Meanwhile, Mondelez does not rank
among the top 10 in value terms due to its
PepsiCo Inc 2 2 2 2 2 2 11.3 reliance on the low-priced concentrates
Nestlé SA 3 3 3 3 3 3 2.8 category in RTD volume terms.
Suntory Holdings Ltd 6 6 4 4 4 4 2.7 Red Bull GmbH however with its relatively
premium but small serving size Red Bull
Dr Pepper Snapple brand ranks seventh in 2012. The
- 5 5 5 5 5 2.0
Group Inc company’s narrow focus in soft drinks,
Danone, Groupe 5 4 6 6 6 6 1.9 being almost exclusively based on energy
drinks, continues to keep the company out
Red Bull GmbH 7 7 7 7 7 7 1.6 of the top five in soft drinks.
Asahi Group Holdings 10 10 TCCC and PepsiCo capture a stronger
- - 8 8 1.5
Ltd 6 6 share in value than in volume terms chiefly
Kirin Holdings Co Ltd 8 8 8 8 9 9 1.4 due to their products, particularly
carbonates, being priced higher than local
Ting Hsin International brands and private label, benefiting from
16 13 12 10 10 10 1.2
Group strong brand equity and extensive
distribution networks.
© Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 12STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS
MARKET ASSESSMENT North America will continue to drive sales in energy drinks North America will continue to lead energy drinks in absolute volume growth terms over the forecast period. However, its CAGR of 8.1% over 2012-2017 represents a moderation from the 11.4% CAGR seen over 2007-2012. The Monster brand has led the market in the US over the review period in terms of absolute volume growth. Rockstar, due in large part to its alliance with PepsiCo, has also seen strong growth in this market. Red Bull entered China in 2011, however Asia Pacific remains the company’s weakest region in terms of market share. However, this region will be exceeded only by North America in terms of absolute off-trade volume growth over 2012-2017 which may raise some concerns for Red Bull. After a period of strong market share gains in this region between 2007-2010 its performance began to moderate. TC Pharmaceutical with its non-carbonated version of Red Bull is the regional leader. Despite the close relationship between Red Bull GmbH and TC Pharmaceutical with the latter having been founded by the late Chaleo Yoovidhya, the companies remain separate entities. © Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 14
MARKET ASSESSMENT The Americas to lead growth in energy drinks In value terms, both Latin America and Asia Pacific gained in importance for Red Bull over the review period. Latin American sales represented 12% of global value sales in 2012 while Asia Pacific made up 8%. In terms of growth prospects, the strongest growth will take place in North America where the market for energy drinks will expand by US$4.1 billion over 2012-2017. In CAGR terms however, the strongest performance will take place in Latin America which will see a 20% CAGR. Red Bull is ranked number one in both markets. In Latin America, its market share remains a healthy 49.7%, however this represents a decline over 2007-2012 as the company faced strong competition from TCCC whose share has risen from 2.5% in 2007 to 14.9% in 2012. Growth in both Eastern and Western Europe will be a comparatively modest at 5% and 5.1% CAGRs, respectively. However, these exceed the CAGRs for soft drinks overall in these regions, which will be only 2.7% and 0.5%, respectively. © Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 15
STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS
CATEGORY AND GEOGRAPHIC OPPORTUNITIES Leading players in energy drinks by off-trade volume and value © Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 17
CATEGORY AND GEOGRAPHIC OPPORTUNITIES
Red Bull shows some weakness in volume sales
The rankings of the leading players in energy The Lucozade brand has faced strong competition in
drinks vary significantly by volume and value. Red its domestic UK market from Red Bull. In 2012, GSK
Bull commands a stronger market share in value announced a strategic review of the Lucozade and
than in volume terms reflecting its relatively high Ribena brands, which may lead to possible
price points and reliance on the mature markets, divestment.
particularly the US, for its sales. The company Red Bull has been constrained to some extent in
however maintained is leading position by both volume terms by its highly concentrated production
measures in 2012 although in both cases it has infrastructure. Up to 2012, the company produced
seen its market share plateau over 2007-2012. exclusively in Austria leading to high shipping and
The major winner over the review period was production costs, which opened up the emerging
Monster Beverage Co, which until 2012 was known markets in particular to less expensive energy drinks
as Hansen Natural Corp. Underpinned by its brands. In 2012, the company announced plans to
distribution agreement with TCCC the brand has build its first factory abroad in Brazil which may help
made rapid gains in both value and volume terms. improve its competitiveness.
The brand’s success has been driven by its North Rockstar’s distribution agreement with PepsiCo did
American performance where it generated 90% of not bring in the same share gains as the Monster
its volume sales in 2012. and TCCC alliance. Rockstar made few share gains
In contrast GlaxoSmithKline (GSK) and its globally, with sales mainly coming from developed
Lucozade brand have been losing market share. In Western markets where Red Bull continues to lead.
volume terms, GSK has lost 2.4 percentage points PepsiCo may have found it hard to drive Rockstar
in market share over 2007-2012. sales in these mature markets in the face of TCCC’s
penetration and Red Bull’s dominance.
© Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 18CATEGORY AND GEOGRAPHIC OPPORTUNITIES Most dynamic energy drinks markets over forecast period © Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 19
CATEGORY AND GEOGRAPHIC OPPORTUNITIES Red Bull tries to counter weakness in key markets with new launch While the US will lead growth in energy drinks in The UK ranks among the top five most dynamic both volume and value terms over 2012-2017 there markets in both volume and value terms. While are clear differences among the top 10 rankings by Lucozade remains the leader here, its fortunes both measures. have waned. Red Bull was responsible for much of China will push ahead of Brazil in volume growth Lucozade’s market share loss in the early part of terms. The market for energy drinks in China is the review period. However, later in the review more mature than in Brazil. Unit price growth in period, smaller brands are increasing Brazil will as a consequence be higher than that in fragmentation. The UK is becoming increasingly China allowing it to take second position in terms of fragmented as newer and smaller players have value sales growth. In China, Red Bull’s sister entered the market. company TC Pharmaceutical with its Red Bull is In 2013, Red Bull launched three new flavour the overwhelming category leader with a market variants in the US market. This marks the first share of 81.2% in off-trade volume terms in 2012. major launch for the brand in the energy drinks Markets entering the top 10 in volume terms category over the review period. The new range include the Philippines and Vietnam both relatively called Edition includes cranberry-, blueberry- and price-sensitive markets. Per capita consumption lime- flavoured variants packaged in red, blue and however in both markets is higher than the global silver cans, respectively. The move may help to average. Energy drinks in many Asian markets invigorate consumer interest in key markets such have a long history of being consumed by truck as the UK and the US where the range of energy drivers and labourers as a temporary energy boost. drinks options has increased considerably. It is These products were in fact the original inspiration recommended that the range be rolled out to other for Red Bull; a Westernised version of the potent markets where market share has weakened. drinks sold through by Thai pharmacists. © Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 20
CATEGORY AND GEOGRAPHIC OPPORTUNITIES Top US brands in energy drinks © Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 21
CATEGORY AND GEOGRAPHIC OPPORTUNITIES Red Bull and Monster look to high-adrenaline sports sponsorship Monster pulls ahead in volume sales Threat from consumer health The Monster brand pulled ahead of Red Bull in the Both Monster and Red Bull have also been US energy drinks market in 2009 in volume sales challenged by the 5-Hour Energy brand from Living terms but remains second to Red Bull in value Essentials, included in Euromonitor International’s terms. Monster has achieved wider presence in Consumer Health database as a tonic and bottled supermarket and forecourt retailers. TCCC has nutritive drink. This product has been heavily leveraged its strong distribution network through marketed on US television and offers a small pack both channels thus giving Monster an edge in size (57ml) and the benefit of being sugar-free. terms of volume sales. While Monster is targeted primarily at younger The Monster brand has also been supported by male consumers, 5-Hour Energy is positioning sponsorship of high-adrenaline sports such as itself as a pick-me-up for office workers and MotoGP, NASCAR and Freestyle Motocross which working mothers. is a direct challenge to Red Bull, which also relies The addition of new flavours in 2013 will help to on sponsorship of these sorts of events to maintain reignite consumer interest. Red Bull’s success in consumer interest. Another reason behind the the US has been due in part to its success in the disparity has been the fact that Red Bull sells on-trade which has helped to introduce the brand primarily in smaller 8.3oz cans, whereas Monster is into the off-trade. Educating consumers about how sold in larger 16oz cans at a relatively cheaper the new flavours can be mixed with alcoholic drinks price. Red Bull has since begun to offer its product in the on-trade should form part the marketing in a wider variety of sizes and in 2012 trumped campaign to launch the brand. Monster with Red Bull Stratos, sponsoring Felix Baumgartner’s free-fall from over 128,000 feet. © Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 22
CATEGORY AND GEOGRAPHIC OPPORTUNITIES Leading players in Brazilian energy drinks © Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 23
CATEGORY AND GEOGRAPHIC OPPORTUNITIES Red Bull vs Burn in Brazil TCCC pushes Burn Localisation of production will help Red Bull Strong growth in the Brazilian energy drinks Localising production in such a key market is a market has attracted a wider number of players, wise move for Red Bull. It also gives the company many of whom have focused on the emergent C stronger capacity more widely in Latin America socioeconomic class, launching energy drinks at where the markets for energy drinks in Colombia lower prices in 1-litre PET bottles. Examples and Mexico are also set to see strong growth. include BadBoy Power Drink from Horizonte and While Red Bull’s number one position remains safe Orbit from Bebidas Chiamulera. These moves have for the time being, reducing the price premium with helped to fuel growth overall in the category. TCCC is recommended. This will be supported by TCCC has made significant gains in the market significantly reducing costs associated with with its Burn brand investing significant resources importing the product from Austria. in marketing. Like Red Bull, TCCC has targeted The entry of Anheuser-Busch InBev NV was a key high-adrenaline sporting activities, announcing in development in the market in 2011. By 2012, the 2012 its sponsorship of Kimi Raikkonen’s Lotus F1 Fusion brand had managed to capture 0.2% of team. The brand competes directly with Red Bull, sales in off-trade volume terms which, while packaged similarly in a slimline metal can. Its price modest compared to the Red Bull brand at 19.8%, points however are typically lower than those of indicates strong potential for further growth. Red Bull giving it a stronger presence among Marketing initiatives centred around the popular lower-income groups. Big Brother Brazil TV programme in 2012 helped to In 2012, Red Bull announced plans to begin increase awareness of the brand among young producing its energy drinks locally. people. © Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 24
CATEGORY AND GEOGRAPHIC OPPORTUNITIES
Worlds apart: A tale of two Red Bulls
The relative weakness of Red Bull from Red Bull
GmbH in Asia Pacific is due in part to the strength
of sister brand Red Bull from TC Pharmaceutical. A
more cohesive international strategy should be
developed by both companies.
The strongest prospects for the two players is in
China, however opportunities are also being
missed in markets such as the Philippines,
Thailand and Indonesia. TC Pharmaceutical sales
here in energy drinks have been virtually flat over
the review period, as newer, more dynamic brands
such as Cobra from Asia Brewery and Sting from
PepsiCo in the Philippines have invested heavily in
marketing and advertising.
A decisive entry for Red Bull GmbH in key Asian
markets will be complicated by the presence of TC
Pharmaceutical’s Red Bull. However, both
companies could benefit from working more closely
together including on the production side to reduce
costs and widen their distribution network. The
sudden death of TC Pharmaceutical founder
Chaleo Yoovidhya in 2012 may present a
challenge however in ongoing collaboration.
© Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 25STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS
BRAND STRATEGY
Red Bull’s premium focus will result in pressure on market share
Red Bull’s sales in 2012 remained dominated by
the US market. In most of its major markets the
company has managed to retain its number one
position in volume terms despite strong competition
from newer entrants. The US is an exception
where Monster owing to the strength of its alliance
with TCCC combined with an aggressive marketing
campaign has managed to topple Red Bull from
first place.
In value terms however, the company’s premium
positioning has meant its ranking has remained
more secure. As the dynamics of forecast demand
shift to emerging markets, where consumers
remain more price sensitive, this premium focus
will result in growing pressure on Red Bull’s market
share. TCCC and PepsiCo have emerged as the
company’s strongest competition whether indirectly
through distribution agreements such as TCCC/
Monster and PepsiCo/Rockstar and through their
own directly owned brands such as Burn and Sting,
respectively
© Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 27BRAND STRATEGY
High octane sports drive home Red Bull message
Event and sports sponsorship have been key elements
for Red Bull’s marketing strategy for many years. Red
Bull’s eponymous brand has achieved remarkable
global success and 30-40% of its sales are re-invested
back in marketing and promotional activity. Red Bull’s
strategy has historically been a 3-pronged approach
incorporating buzz marketing, sponsorship and TV
advertising. Buzz marketing, including handing out free
samples at campuses and events where under 30s
gather, is often used as a way of initially raising
consumer awareness when entering new markets.
In 2012, the company took its marketing literally to an
entirely new level with the Stratos campaign which
featured Felix Baumgartner in a record- breaking
128,000 feet jump from the earth’s stratosphere,
making him the first man to break the speed of sound
while in freefall. The event was streamed live on line
with viewers able to log in to post comments via Twitter
and Facebook. Motorsports is another key focus for
the company with its own very successful F1 racing
team.
© Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 28BRAND STRATEGY
Red Bull tries to stay true to its roots
In a bid to stave off competition from rival brands, Red
Bull launched the Red Bull Edition range in 2013 in select
city markets in the US. The launch will likely be followed
by a nationwide roll-out later in the year. Despite pressure
from other energy drinks brands many of which have
launched additional flavours Red Bull has stayed loyal to
its original formulation and packaging.
The launch of cranberry, blueberry and lime Red Bull
variants is a major direction change for the brand, being its
first major launch over the review period. In order to
differentiate between Red Bull Edition and the original Red
Bull the new cans received a facelift with the addition of
new colours and a new bull design.
Red Bull has not as aggressively as other brands
launched into new packaging formats, remaining almost
exclusively with slimline metal cans. It has however in
some mature markets such as the UK launched into 1-litre
PET bottles. This reluctance is in part due to the
company’s strategy of retaining its premium positioning.
© Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 29STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS
OPERATIONS
Expanded corporate operations
Red Bull GmbH
Red Bull Soft Drinks Other Businesses
Motor Racing, Media,
Red Bull Energy Drinks MVNO, Fashion Online
Retailing
Red Bull Simply Cola,
Carpe Diem
© Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 31OPERATIONS Red Bull looks to diversification Red Bull is diversifying into other businesses, rather than limiting itself to energy drinks. In recent years, it has been branching out and became a media company in its own right. The participation in sports sponsorships and events connects the company with a global brand that has passion and excitement associated with it. The company is also present in RTD tea and bottled water with the Carpe Diem brand which it launched to target the health and wellness trend in soft drinks. Carpe Diem Kombucha is a premium RTD tea sold in Western Europe. The brand is also in bottled water in Switzerland and Austria using plant extracts and slight carbonation to offer a healthy alternative to carbonates. The company owns two Formula One teams (Red Bull Racing, Scuderia Toro Rosso), a NASCAR racing team as well as several football teams in Brazil, the US and Germany. In South Africa, the company is partnering with Cell C to offer voice and broadband services as a mobile virtual network operator (MVNO), ie a company that provides a mobile phone service but does not have its own licensed frequency. Red Bull Mobile will be the second MVNO in the country, after Virgin Mobile. It also sponsors many events - from cliff diving to air races - and subscribing to Red Bull Mobile is a way for people who like the brand to access further benefits when they attend these events. These kinds of partnerships between operators and consumer brands are common in Europe. In Germany, for example, one operator, E-Plus, has 19 such partnerships. It is a way for these brands to get closer to their target group. The Group also includes Austrian TV station ServusTV, lifestyle and fashion magazines and a construction company called Bull Bau. Red Bull had 8,966 employees in 165 countries as of 2012. The company, which is not listed, traditionally finances its investments from its cash flow. © Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 32
OPERATIONS Red Bull expands production outside Austria for first time Red Bull received approval from the Brazilian government to build its first production facility in the country in early 2010. The company's initial investment in the project is expected to be around US$111 million. This will also be the company's first production facility outside its home market, indicating a shift from a single production site and the importance of the Latin American market to Red Bull. The sustainability of its growth and strong position is questionable as the competitive environment changes. While its products are present in more than 160 countries, most of its soft drinks sold around the world come from one single site. The company is known for combining the production of the can packaging material and filling at one site in order to save on transportation time and costs. The key advantages of one single site include consolidated management, an up-to-date inventory and energy savings. The main downside of a single production site is perhaps the extra distance needed to ship all its finished goods to different parts of the world. Being unable to produce locally to supply regional markets can make retail prices less competitive than those of local products. In Brazil, Red Bull's retail price is 40% higher than that of Burn. In 2011, the rumour that TCCC may look to fully acquire or partially acquire Monster surprised analysts and should have alarmed Red Bull. If Monster were to be under TCCC's full control, their combined volume sales would be very close to those of Red Bull and would certainly pose a threat to Red Bull's global leadership. Although TCCC did not acquire Monster at that time, the possibility of an acquisition has not been ruled out and the company was the subject of more takeover rumours in early 2013. As Red Bull entered China in 2011, the company could also consider building a facility there to serve the Asian market over the medium term. There are strong arguments for combining forces with sister company TC Pharmaceutical to better penetrate Asia Pacific markets. © Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 33
STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS
RECOMMENDATIONS
Holding onto top spot in energy drinks
Brazilian production Work for benefit of both Red Bulls in Asia Pacific
Establishing production in Brazil is a wise move for The failure of TC Pharmaceutical and Red Bull
Red Bull. Relinquishing to some degree its highly GmbH to work together for a cohesive Asia Pacific
centralised production model will help it to better strategy will expose both players to competition
compete in the emerging markets. The move to from Japanese brands and from US-based
Brazilian production will also open up new multinationals such as TCCC and PepsiCo. The
opportunities in the Americas. The Brazilian market Thai Red Bull brand has a long history in this
however is crucial to the company’s ambitions region and is suffering from waning consumer
given the level of growth expected to take place interest in the face of new and exciting launches.
here. Red Bull GmbH’s opportunities will continue to be
limited for the time being as a result.
Edition range Premium positioning
While this report does not cover on-trade sales, Monster and Burn will remain major threats. The
popularity in this channel has a subsequent benefit price differential between these brands should be
for off-trade retail sales. The launch of the Edition reduced. Red Bull can continue to position itself as
range should be extended to the on-trade with a premium and maintain a price premium but in order
marketing campaign to educate consumers about to gain better traction among younger consumers
how to mix the new flavours. Rolling out the range and access to a wider demographic the company
to other markets where market share erosion has should focus on driving volume growth particularly
taken place such as the UK is also recommended. in emerging markets or risk market share erosion
from TCCC-backed energy drink brands.
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