Nader Tavassoli LBS327 July 2022 Red Bull Spreads its Wiiings “There is no market for Red Bull. But we will create one.” – Dietrich Mateschitz, April 1987 Red Bull created the energy drinks category in 1987 and has led it ever since. Brand Finance ranked it the world’s 3rd most valuable soft drink brand in 2021 ($8.1 billion, up 15% from 2020), behind only Coca-Cola ($33.2 billion; down 13%) and Pepsi ($18.4 billion; down 3%) and well ahead of its most direct competitor, Monster ($4.9 billion; up 3%). With record sales of $8.9 billion across 172 markets in 2021, the nearly 10 billion Red Bull cans sold were a 24.3% increase over 2020. At twice the price per volume of its competitors, and per capita consumption in the U.S. at a third of that in Austria, the brand retained strong growth potential. Red Bull’s ingredients include sugars, B-group vitamins, the amino acid Taurine, and similar amounts of caffeine per volume as filter coffee. Its slogan is “Red Bull gives you wiiings,” and it claims to increase physical endurance, improve concentration, vigilance and reaction speed, and stimulate the metabolism. While research backs up these claims, 1 the UK’s Advertising Standards Authority recently reprimanded the company for implying the drink has health benefits in a lighthearted billboard in the London underground that stated, “The secret to finishing early ... Because to leap every hurdle a hectic day brings, you just need to know: Red Bull gives you wiiings”. Red Bull was inspired by Lipovitan D from Taisho Pharmaceuticals, a producer of tonic drinks and other healthcare products, and one of Japan’s biggest taxpayers. Lipovitan D had helped Austrian national Dietrich Mateschitz overcome jetlag. A similar beverage called Krating Daeng (translating as “red bull”), an affordable and popular Thai drink, had been created by Chaleo Yoovidhya. He and his son Chalerm co-founded Red Bull GmbH with Mateschitz (who, incidentally, was born under the Taurus zodiac sign). This case study was prepared by Nader Tavassoli of London Business School. London Business School cases and teaching notes are developed solely as the basis for class discussion and are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. © 2022 London Business School. All rights reserved. No part of this case study may be reproduced, stored in a retrieval system, or transmitted in any form or by any means electronic, photocopying, recording or otherwise without written permission of London Business School. This document is authorized for use only by Emily Jarrell (e_jarrell@u.pacific.edu). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. CS-22-016 Red Bull was positioned to be trendy and upscale with a product formulation for the taste preferences of the Western Hemisphere. Initial market research had been far from promising, however. The drink’s thin colour was considered unappetizing, and some consumers described the syrupy mouth feel and taste as “disgusting”. Moreover, the brand promise that it “vitalises mind and body” was considered irrelevant at best. The research company considered the test results a total failure. Not so Mateschitz, who pointed to the polarized aspect of the response: half of the test group loved it while half hated it. He thought “Great! You can’t beat ambivalence. It’s attention, it’s controversy, it’s discussion that keeps a product alive.” Initially, Red Bull actively fuelled controversy, such as with tongue-in-cheek responses to rumours about the drink’s contents: “People ask me if it’s true that Red Bull is made from bull testicles,” said one of the company’s early employees, “I tell them sure, but only two testicles to a can.” Rather than hurt sales, he suggested, “The more teachers hated Red Bull, the more their pupils had to drink it.” 2 The same might be said for the delay of Red Bull’s regulatory approval in some countries because it was considered dangerous, purportedly causing heart attacks when over-consumed. 3 Influencer marketing Red Bull sales at first took off as an alcohol mixer in clubs and bars frequented by the “in crowd”; in part because supermarkets would not stock it. After all, nobody knew what an energy drink was in the late 1980s. Today, mixing accounts for only a small fraction of sales, with consumption at work leading the way, followed by consumption moments such as gaming, driving, live events, at home and fitness. Key competitors are caffeinated drinks such as colas and coffee, noncaffeinated soft drinks, water, and beer. Communications avoided traditional marketing and relied on word-of-mouth or “buzz” marketing, always playing on associations with energy, danger and youth culture to cultivate brand mystique. In its early days, nicknames such as “liquid cocaine” and “speed-in-a-can” further contributed to Red Bull’s polarising brand identity. To induce consumer trial, education teams drove branded cars with a giant Red Bull can mounted on the back, distributing samples to “those in need of energy” at truck stops, office buildings, universities, gyms and construction sites. The company also gave cans to deejays while they were mixing music and purportedly left empty cans on tables inside and outside trendy bars and nightclubs, even if Red Bull was not actually sold there. And from the beginning, student marketeers promoted the product on campus by providing students with free cases of the drink and encouraging them to throw parties. The scheme targeted likeable organizers of student events, since target consumers – mostly active young people who saw themselves as non-conformist – were easily turned off by a direct sales approach. Over time, social media became a key communications channel with more than 10 billion views across all accounts in 2021, or more than 28 million views per day. Red Bull had over 80 Facebook pages, such as www.facebook.com/RedBull with over 48 million followers and nearly 11 million following www.facebook.com/redbullracing; there were 32 million followers across 62 TikTok accounts globally, such as www.tiktok.com/redbull with more than 6 million followers; its 190 Instagram accounts – such as redbullbike, redbullmotorsports, redbulluk, and redbullargentina – had over 15 million followers in 2021, having grown from 8 million in 2018; 4 and the company managed over 90 Twitter handles, two LinkedIn accounts and 40 YouTube channels. 5 In fact, www.youtube.com/user/redbull was the world’s most popular brand channel on © 2022 London Business School. Page 2 This document is authorized for use only by Emily Jarrell (e_jarrell@u.pacific.edu). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. CS-22-016 YouTube with 10 million subscribers. All these channels featured pro athletes, deejays and pilots performing stunts or competing in Red Bull events, often drinking Red Bull and promoting the brand through snapshots of their branded gear. Experiential marketing Estimated to reinvest around 30% of revenues in marketing, Red Bull is not as much about the product as it is about the experience and passions of its audience. Central to its efforts are events that embody the spirit of Red Bull – from extreme windsurfing and ice climbing to Red Bull Flugtag, a fun weekend of activities attracting crowds of 30,000 spectators or more, watching amateurs launch their own flying devices into water off a 30-foot ramp. Everything revolves around one concept: creating content and experiences people would be interested in even if they don’t care about energy drinks. By enabling cultural and extreme sports events, Red Bull developed a cult following among marketing-wary Millennials, who perceive it as an anti-brand. Red Bull also creates youth culture events, many of which are participatory. For © 2022 London Business School. Page 3 This document is authorized for use only by Emily Jarrell (e_jarrell@u.pacific.edu). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. CS-22-016 example, the Red Bull Music Academy brings aspiring musicians together with deejays for two weeks to attend workshops and studio sessions. Red Bull Records, founded in 2007, has also had its share of hits, such as AWOLNATION’s “Sail”, which went triple platinum and sold 15 million copies worldwide. Red Bull sponsors over 800 top athletes, often allowing them to turn niche sports into careers, thus fostering fierce loyalty. It owns multiple sports teams, including F1’s Red Bull Racing and football (soccer) clubs in Europe, the U.S. and South America. In 2022, two of its clubs competed in the European Champions League. Its logo further gained high-octane exposure to 400 million eyeballs following F1 on television and the Netflix series “Formula 1: Drive to Survive”, with Red Bull’s Max Verstappen winning the 2021 world title on the last lap of the season. Amateurs, too, are targeted. For example, the Red Bull Backyard Digger helped aspiring BMX bikers build their own course for free. 6 In Mateschitz’ words: “We don’t bring the product to the people, we bring people to the product. We make it available and those who love our style come to us ... Red Bull isn’t a drink, it’s a way of life.” In 2019, Red Bull Project Pro featured six top UK athletes to inspire consumers wanting to elevate their fitness routines with advice from elite athletes through never-before-seen video of how they train and live their day-to-day lives. The promotion featured bespoke on-pack wraps, each signed by and illustrating one of the six athletes. This was supported by engaging social media content, sampling in gyms and other sports locations, as well as in-store activation and promotional placements. Similar activations followed, such as a 2021 campaign with Trent Alexander, the Liverpool F.C. football player. The pandemic had severely disrupted live spectator events, although events such as Red Bull Flugtag returned in Vienna in 2021. However, this did not prevent live engagement and its digital amplification. The largest 2021 Red Bull event in terms of participation was the Wings for Life World Run, in which 184,236 people all around the world ran for those who can’t, to help find a cure for spinal cord injuries. Participants joined via an app that was a game-changer in participation, making it the biggest running event in the world. Wings for Life World Run was followed in participant numbers by the Red Bull Campus Clutch, with 25,000 participants across 400-plus local events in 50 countries, making it the largest ever © 2022 London Business School. Page 4 This document is authorized for use only by Emily Jarrell (e_jarrell@u.pacific.edu). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. CS-22-016 global e-sports tournament for students. With the Austrian foreign ministry helping gain visa approvals from all continents (bar Antarctica), the world final was held in Madrid with live spectators and 5.5 million livestream viewers, generating around 350 million contacts in earned media. The event also provided an inspiring “Red Bull gives you wiiings” story, with the MVP of the winning team, Egyptian Mohamed Shalaby, being offered the chance to join the professional Team Vitality following the event. Content marketing Red Bull had become a fully-fledged media company, creating and distributing original content that typically features extreme human feats (www.redbullmediahouse.com). Two million locallanguage print copies of the brand’s magazine, The Red Bulletin, are distributed monthly in Europe and North America. The company publishes feature films, music and books, and has its own TV and radio channels. Red Bull Content Pool makes available, for free, a large portion of its content for editorial use by publishers ranging from MSNBC to ESPN (www.redbullcontentpool.com). The content may include the familiar twin bovine and sun logo – the sun being the ultimate source of energy in the universe – on the back of a wingsuit or the side of a skate ramp, but there will be no mention of the actual drink. As one media analyst said, “Nobody is going to go to a website and spend 45 minutes looking at video about a drink.” 7 Whether via Snapchat, Instagram, TikTok, or YouTube, Red Bull tailors its content to each platform’s characteristics. For example, Snapchat is favoured for raw, authentic and fun videos; whereas Instagram uses short-format videos that fit into the allotted 60 seconds time frame. On YouTube the company shares mostly long-format videos using a storytelling format. Red Bull regularly encourages the creation and sharing of user-generated content (UGC) across all its social media channels. This provides it with a vast content library that marketing-weary consumers appreciate as the most authentic form of marketing, preferring UGC from their peers to content from paid influencers. Much of the UGC is hair-raising and further builds the brand image. The company’s sponsorships too imply danger. For example, in 2012 Red Bull Stratos featured Austrian skydiver Felix Baumgartner jumping out of a space capsule, reaching 1,357.64 km an hour to break the sound barrier in a 10-minute free fall from the stratosphere. Followed live online and on TV by millions around the world, it achieved 7.7 billion impressions at the time and over 14 billion to date. © 2022 London Business School. Page 5 This document is authorized for use only by Emily Jarrell (e_jarrell@u.pacific.edu). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. CS-22-016 Employee branding Red Bull had 13,610 employees at the end of 2021 (8% more than in 2020). Its freewheeling culture and the quirky people this attracts have been dubbed “the wiiind behind its wiiings.” 8 In order to know whether Red Bull is the place for them to spread their wiiings, applicants can take a 30-minute online “Wingfinder” assessment 9 to see what role, if any, might best fit them at the company. Employee reviews on Glassdoor describe the organisation as a fun place to work that “encourages out of the box thinking” and having a “play hard, work hard” culture, with 86% stating they would recommend working at Red Bull to a friend (although some employees voice complaints about long working hours and lack of managerial structure). “Getting the brand” is important, no matter what a person’s role is, and it is deeply embedded within the senior management team with the head of brand, finance, legal, and marketing having been with the company for over 20 years. A marketer might be assigned to a particular market segment based on their interests, such as BMX biking, rap music, surfing, gaming, or auto racing. Each market segment has a dedicated team – often former athletes, artists, or deejays – whose members share its interests, and team members are tasked with figuring out what they can do to support their communities, rather than focus on what consumers can do for the bottom line. Red Bull has a mission (“Giving wings to people and ideas”) and values (“People, Ideas and Culture”), but new hires don’t undergo a formal induction programme. Instead, they viscerally experience the culture. Even a part-time student brand manager might be put on a plane during their first few weeks on the job to attend a Red Bull event and live it up with their new colleagues. 10 Mateschitz personifies this culture. He eschews bureaucracy and is known to rely on gut feel, and his passion for flying is evident in his collection of classic airplanes housed in a futuristic, wingshaped building, Hangar-7. The global headquarters in Fuschl, Austria, is shaped in the form of two volcanoes – earth’s most powerful energy force – spewing not lava but a herd of bulls. Workspaces typify the brand, with the award-winning Canadian headquarters described as “more nightclub than office,” with skateboarding and frisbee-playing in the atrium. But this is not prescriptive: each country operation is free to pursue ideas deemed most appropriate for its local market. © 2022 London Business School. Page 6 This document is authorized for use only by Emily Jarrell (e_jarrell@u.pacific.edu). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. CS-22-016 Broadening the product line Red Bull remains reliant on its original product, though it introduced varieties such as Sugar Free in 2003, Total Zero (no calories) and seasonal Editions (e.g., cranberry, blueberry, tropical) in 2012. The flavoured versions aim to provide variety to regular drinkers and increase consumption frequency. For example, the popular 2020 watermelon flavour Summer Edition became a permanent Red Edition variant. The 2021 cactus fruit Summer Edition also resonated well and became a permanent Green Edition in many countries (see can, below). Red Bull had its share of new-product failures. A foray into energy shots – a non-carbonated, 2oz concentrated version of the 8.4oz original – arrived with great fanfare at convenience stores and petrol stations in 2009. It was discontinued in 2011, having been unable to challenge the energy-shot leader, 5-Hour Energy. Launched in 2008, Red Bull Simply Cola (shown in the advertisement above) – less carbonated and less sweet, but 50% more expensive than Coke – met a similar fate having gained traction in only a few markets, such as Austria and Germany. In 2018, Red Bull Simply Cola was reintroduced and complemented with further variants under The Organics by Red Bull sub-brand, a collection of premium sodas (50% more than Coke) made with natural ingredients. The “craft beverage” range comes without caffeine, except for Simply Cola. The range was initially launched in the on-trade channel (bars, clubs, etc.) and targeted at urban adults seeking a natural alternative to conventional soft drinks. It is also supported by the online Organics – The Lifetime Magazine (https://www.redbull.com/int-en/projects/organics-thelifetime-magazine) featuring “Talent comes naturally” human-interest stories, as well as cocktail and mocktail recipes. © 2022 London Business School. Page 7 This document is authorized for use only by Emily Jarrell (e_jarrell@u.pacific.edu). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. CS-22-016 Stretching the brand Red Bull had long stretched its brand outside the drinks category, such as with its media companies, Red Bull Mobile in Austria, sports teams with their Red Bull Collection-branded merchandise, and a limited edition Athletes Collection of Red Bull-branded apparel and sports gear (www.redbullshop.com). In 2004, Red Bull entered F1 racing when it purchased Jaguar Racing from the Ford Motor Company, who had decided it could “no longer make a compelling business case for any of its brands to compete in F1.” 11 Red Bull paid a symbolic $1 in return for the commitment to invest $400 million in the team over three Grand Prix seasons, renaming it Red Bull Racing in the process. 12 The team has since gone on to win the Constructors’ Championship four times (201013) and the drivers’ championship five times (2010-13, 2021). Red Bull also bought the Italian auto racing team Minardi in 2006 to serve as its junior team, rebranding it Scuderia Toro Rosso (“stable of the red bull”). In 2019, this was rebranded Scuderia AlphaTauri, in order to become a namesake of Red Bull’s emerging fashion brand, launched in 2016 (https://alphatauri.com/en-gb). Named after “the brightest, most radiant and energy-rich star in the constellation of Taurus (the bull)”, AlphaTauri’s vision is “to constantly challenge what is and elevate what will be.” Its mission is to be “a visionary fashion enterprise that empowers others to be part of our spirit.” Priced in the super-premium to luxury range, the brand was positioned to have a purposeful design to fit consumers’ lifestyles and provide “functionality and innovation without sacrificing style,” while adding value “to both body and mind.” All this came with a bold ambition, as the CEO, Ahmet Mercan, explained: “We are an industry outsider in the fashion industry … we want to become one of the leading brands in premium fashion.” 13 AlphaTauri aimed to do so by creating an entirely new fashion segment on the back of patented technologies such as Taurex® which reflects the wearer’s infra-red rays back into the body to “revitalize and promote vitality,” Taurobran® which is a waterproof and ultrabreathable competitor to Gore-Tex®, and innovations such as the 2021 capsule collection of app-controlled heatable micro-climate jackets, launched in collaboration with Deutsche Telekom and Schoeller Textil AG. The F1 connection provided AlphaTauri with a new platform to grow awareness and coherent brand associations with technological innovation. Fashion in motorsport have a long history. Benetton participated as an F1 constructor from 1986 to 2001; Mercedes drivers wore Gieves & Hawkes suits at public events; brands such as Marc Jacobs, Moschino and Tommy Hilfiger have brought motorsport-inspired collections to the catwalk; McLaren marked its 30-year Hugo Boss sponsorship with drivers Lewis Hamilton and Jenson Button modelling the 2011 autumn-winter campaign; and Ferrari launched its first high-fashion collection in 2021. © 2022 London Business School. Page 8 This document is authorized for use only by Emily Jarrell (e_jarrell@u.pacific.edu). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. CS-22-016 Scuderia AlphaTauri’s lead driver, Pierre Gasly, was already considered a fashion icon before F1’s association with the label and a natural brand ambassador. AlphaTauri provided new designs for the F1 car and the drivers’ racing suits. Eschewing traditional fashion shows, its new collection was launched during the 2022 F1 car reveal, with the drivers modelling the new look alongside fashion models. The drivers can further be seen wearing their favourite looks from the AlphaTauri collection off-grid. In 2022, the brand landed a major coup in becoming the Official Premium Fashion Apparel Supplier of Formula 1, supplying uniforms to all F1 personnel on the circuit, including senior staff and F1 presenters. As Mercan mused: “We see a fantastic synergy between both – fashion and F1 – especially when you start collaborating with each other long-term. F1 is a playground for us as fashionpioneers to get inspired and test new technologies and innovations under extreme conditions. As a premium fashion brand, it’s the perfect partnership to engage with a strong community of fans and hopefully our contribution to the world of F1 inspires a new generation of fans to share our passion.” 14 AlphaTauri’s showroom in Salzburg, Austria, also comes with a twist. Opened in 2021, it features blackened and oiled volcanic rocks, wet-look floorings, polished aluminium and blade-like shelving systems to create an environment that reflects the brand’s future-facing DNA. Its Mobile Innovation Lab reinforces the brand image, with its personalised, digital avatars, body scanners, virtual fitting rooms, and VR tours of collections and factories. The brand’s sweaters are produced using 3D knitting technology licensed from the Japanese textile manufacturer Shima Seiki, and specially designed AlphaTauri apps enable consumers to customize their garments down to the finest detail and to receive their order in about one hour, with minimal waste, thanks to a seamless production process. 15 The brand had introduced the robotic AlphaTauri DSA-01, a digital sales and studio assistant to enable buyers to visit and experience the showroom via the Internet. Online shoppers could control the robot and its moving studio camera to browse and purchase from the store. 16 © 2022 London Business School. Page 9 This document is authorized for use only by Emily Jarrell (e_jarrell@u.pacific.edu). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. CS-22-016 Looking ahead AlphaTauri relied on the endorsement of its parent brand as much as The Organics line extension did. As Mercan explained, “We’re a 100% spin-off of Red Bull. No one in the market needs another fashion brand. So, our concept is to be a disruptive and innovative company. It’s always been a dream of [Dietrich Mateschitz] to own a fashion brand.” 17 The new ventures left the management teams at Red Bull and AlphaTauri much to consider, however. Would Red Bull give The Organics and AlphaTauri wiiings and enable them to conquer new markets? Or could the association with Red Bull prove limiting? Most worryingly, could the brand stretch into The Organics and AlphaTauri risk alienating Red Bull’s loyal consumers and dilute its carefully cultivated anti-brand brand image, thus undermining the ability to recruit the next generation of Red Bull consumers? Critically, could the company’s carefully honed marketing formula be successfully deployed in these new ventures, or did they require a different approach? © 2022 London Business School. Page 10 This document is authorized for use only by Emily Jarrell (e_jarrell@u.pacific.edu). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. CS-22-016 Endnotes (All web links accessed 1 July 2022) 1 C. Alford, H. Cox, & R. Wescott (2001), “The effects of Red Bull energy drink on human performance and mood,” Amino Acids, 21(2), 139-150; R. Seidl, A. Peyrl, R. Nicham, & E. Hauser, E. (2000), “A taurine and caffeine-containing drink stimulates cognitive performance and well-being,” Amino Acids, 19(3-4), 635-642; Wesnes, K. A., Brooker, H., Watson, A. W., Bal, W., & Okello, E. (2017), “Effects of the Red Bull energy drink on cognitive function and mood in healthy young volunteers,” Journal of Psychopharmacology, 31(2), 211-221. www.si.com/vault/2003/08/04/347416/the-fuel-of-extremists-or-taurine-in-your-tank-austrian-marketingmaverick-dietrich-mateschitz-found-the-perfect-way-to-sell-his-high-voltage-energy-drink-red-bull-marry-itto-the-wildest-and-wackiest-action-sports 2 This case is based, in part, on the London Business School case “Red Bull: The anti-brand brand,” by S. Coughlan, N. Kumar, and N. Tavassoli (The Case Centre reference no. 505-098-1) 3 4 www.trackalytics.com/instagram/profile/redbull/ 5 https://unmetric.com/brands/red-bull 6 www.youtube.com/watch?v=4rZcrcaQRak https://contently.com/2012/12/19/red-bulls-world-the-secret-ingredients-of-revolutionary-contentmarketing/ 7 8 www.forbes.com/sites/forbesasia/2013/06/24/the-wind-behind-red-bulls-wings/#7967c76c7b79 9 www.redbull.com/int-en/wingfinder 10 www.youtube.com/watch?v=xJrjwKp5j4Q 11 http://news.bbc.co.uk/sport1/hi/motorsport/3665810.stm 12 http://news.bbc.co.uk/sport1/hi/motorsport/formula_one/4012381.stm www.voguebusiness.com/fashion/the-f1-effect-can-autobrands-be-mega-luxury-lifestyle-brands-tooferrari-mercedes-benz-alpha-tauri 13 14 https://scuderia.alphatauri.com/en/ahmet-mercan-interview-2021/ 15 www.wallpaper.com/fashion/alpha-tauri-futuristic-fashion-hq www.the-spin-off.com/news/stories/Brands-AlphaTauri-opens-first-Central-European-showroom-inGermany-15475 16 https://ww.fashionnetwork.com/news/Pitti-uomo-101-opens-with-grinta-baldinini-alphatauri-andcaruso,1367409.html 17 © 2022 London Business School. Page 11 This document is authorized for use only by Emily Jarrell (e_jarrell@u.pacific.edu). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies.