Nottingham University Business School
MBA 2010
RED BULL: the Long term Business Sustainable Plan
Tas Dhanasarnsombati
ID: 4149663
(Words count: 15,119)
Abstract
According to number of studies shows that food and beverage market is one of the most
sustainable markets of them all. As majority of super-power supermarkets continue to
increase their profits, proven that despite either the up or down-turn of the economic
situations, food and beverage always will be the basic need to everyone. However with the
food and beverage products keep emerging though out rapidly into the market, leaving
consumers with numbers of choices to choose to purchase. In the fearsome and crowned
markets as food and beverage market, it seems that all the business strategies, marketing plan,
and pricing, are the key factors to indicate whether the products will be success or not.
Furthermore even though the majority of food and beverage products are ‘necessary’ for
human life, but some food and beverage products are exempted as ‘necessary products’ for
some consumers. This paper will attempt to investigate the not so ‘necessary’ beverage
market such as ‘Energy drink’. The focus case example chosen is ‘Red Bull’ which will
include the analysis on future of ‘Red Bull’ business and lastly the recommendations of
possibility expanding its product lines.
TABLE OF CONTENTS
Introduction
1
Aims and Objectives
1
I. Energy Drinks
2
(a) Energy Drinks Market
3
(b) The consumers target group
6
II. History and current position of Red Bull
7
III. Reasons behind the success of Red Bull
10
(a) Innovative products
(b) Marketing strategy and Positioning
10
12
IV. Red Bull’s competitors
16
(a) Monster
(b) Relentless
(c) Rockstar
18
20
22
V. Future Challenges for Red Bull
26
(a) Health concerns
26
(b) Declining sales
28
VIII. Research methodology
31
IX. Data analysis
36
X. Recommendations and conclusion
41
References
45
Bibliography
50
List of figures
51
Appendices
53
Introduction
Energy drinks which is one of the major market in Food and Beverage market is one of the fast
growing beverage business in the world. According to the report from IMAP in 2010 shows that
the global food and beverage sector in 2008 was valued at $5.7 trillion USD. And the industry is
one of the major contributors to growth of all economies as well as historically witnessed with
the consistent growth. The industry itself expected to consistency growing by 3.5 percent and
estimated to worth $7 trillion USD by 2014 (An IMAP, 2010). As well as the support evidences
from Datamonitor shows as well that food and beverage sector already grown by 15.1 percent
from 2005 to 2010 (Datamonitor, 2006) which even more substantial fact of how fast this
business factor grow.
The energy drinks is one of the sector contribute to the substantial growth on beverage sector.
BBC News report in 2005 and the forecast and analysis from Mintel shown that Energy drinks
accounted for £1 in every £5 spent on soft drinks in the UK, as well as the substantial increase in
demand of over 75 percent since 2000 (BBC News, 2005), therefore make this beverage sector
now one of the most competitive business at the moment.
The beverage industries always dominated by the super-power brands such as Coca Cola, Pepsi
Nestle and so on, similarity with the energy drinks. However in the past decade Red Bull had
enjoyed its success by become one of the household brands in the energy drink market; via
achieve the strong brand recognition from its innovation products concept and the phenomenal
success of its marketing strategies, not to mention the great positioning of the brand ‘Red Bull’
(Kastner & Partners, 2005). However despite many of Red Bull strong business aspects
marketing such as create a ‘Buzz’ or associated with the innovate business theme or involve in
extreme and exotic sports (Dolan, 2005), all of those marketing activities came a cost. And with
all those Red Bull marketing plan and its business strategies had been studies worldwide. The
success of Red Bull can be duplicated by its competitors. As the numerous super-power brands
are eager to take their share in energy drinks sector, therefore the long-term sustainability of the
Red Bull needed to be questioned.
Aims and Objectives
The aims of this dissertation are to identify the growing or decreasing global demand on energy
drink market in current economic situation and in long term future. With the concentration of
analysis on the current position of Red Bull on energy drink market in term of its performance
and he reason behind its successes. The objective of this dissertation is to provide the in dept
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information on the fundamental reasons behind the successfully factors of Red Bull. Especially
the intensive analysis on Red Bull core competencies in comparison with its competitors as well
as gather possible expanding of other Red Bull related products in the future in dept details. The
author will also carry out questionnaire survey in questions and further researches, which in
additional provides the understanding and analysis overall Red Bull’s product image and its
performance as well as provides readers with the overall consumers’ opinions toward energy
drinks.
This dissertation will be structured as follows. First, the author will be explore the energy drinks
market in business prospective in general, with the analysis of the reasons behind the success and
the obstacles and negative image on Red Bull energy drinks, with additional the study on Red
Bull competitors to compare and provide the better understanding and into luxury brands global
industry of the energy drinks business. Secondly, the author will be looking into the fundamental
business aspects, which will be include the new or innovative business strategies which now
mostly been adapted among the major energy drinks brands, such as media marketing,
positioning and pricing. Thirdly, a future analysis via questionnaires into the perception toward
Red Bull energy drinks especially focused on the consumers’ opinions on alternative energy
drinks. Forth, the author will undertake the data analysis from the questionnaire results providing
with graphs and data formats, primary researches and at later stage compare with secondary
researches. Lastly the author will conclude and discuss implications for the future.
I.
Energy Drinks
‘Energy drinks’ can be referred to ‘non- alcohol’ beverage drinks which are intended to provide
an immediate burst of energy for the consumer. The energy drinks contain general caffeine
calories, in various combinations with other energy enhancing ingredients such as Vitamins B,
artificial sugar, taurine, hebal extracts and some contains artificial flavors (ResearchWikis,
2008).
Product Specification
Product name
Lipovitan D
Suggested retail price
¥153 (per drink; including tax)
Ingredients
(per 100mL)
Taurine
Inositol
Nicotinamide
Vitamin B1 nitrate
5
1000mg
50mg
20mg
5mg
Vitamin B2 phosphate
Vitamin B6
Anhydrous caffeine
5mg
5mg
50mg
Indications
For use as a nutritional supplement: when tired or sick; for
anorexia and other nutritional ailments; for fevers and exhaustion;
and for women who are pregnant or nursing.
Dosage
Adults (aged 15 or over) one bottle (100mL) per day.
Figure 1.0 Lipovitan D ingredients example
Energy drinks wee first appeared in Asia in 1960s as responding to the demands on dietary
supplement which believed the energy drinks as increasing in physical energy. A Japanese
company ‘Lipovitan D’ founded by Taisho Pharmaceuticals was the first generation of the
energy drinks, it was introduce first in 1962 (Taisho, 2004). It was an instant success in Japan
and all around Asia market as believed to not enhance the physical strange but also reduce
mental and physical fatigue as well. Energy drinks was also proved to be success in Thailand
soon after which consumers in both countries considered the energy drinks as the alternative
refreshing drinks over westernize ‘coffee’ (Heckman, 2009).
The energy drinks have expended to the rest of the world from the first launched of Red Bull into
the US market back in 1997 (Griffiths, 2009). Back in the US on 1960 actually the US
consumers had already experienced the energy drinks but which different purpose with the
energy drinks we known today. In the 1960 ‘Lucozade’ was sold in UK as the medicine for the
aid recovery and ‘Gatorade’ was served to a University of Florida football team as aimed to
improve the athlete performances which was claimed with specially formulated without the
dangers or drawbacks of energy drinks (Rouse, 2009). But later the world have witnessed the
phenomenal successes of the energy drinks with the twists of the drinks purpose and the changes
in consumers market which was the born of energy drinks that more than just medical believes
(Mupsip, 2009).
(a) Energy Drinks Market
From the research of Companies & Markets, a market research company based in London
reported in 2010 the global energy food and drinks market was worth $30.4 billion and during
2009 to 2010 the compound annual growth rate of 6.8% (Agrawal, 2011), as well as the
prediction on the global consumption of the energy beverage drinks will continuing to grow by
25% from 2010 to 2013 alone and will gradually will hit $49.9 billion by 2014 which account for
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10.3% of the total global soft drinks market (Knowledge@Wharton, 2009). The report from
British soft drinks association reported growing consumption on energy drinks market from 8.2
litres per person to 8.6 litres per person from 2008 and 2009 and predicted that the energy drinks
market which represented 74% of the combined sports, is likely to continue growing for decade
to come despite the global economic difficulty period. The energy drinks market had indeed
grow by 67% worldwide (Likemindedoq, 2010). The energy drinks market was estimated worth
over $32 billion in 2010 which can be indicated the increase sales of 33.7% in the US and 18%
increased in Europe (Merett, 2007). One of the major reason of continuing growth of the energy
drinks was due to the various numbers of emerging new energy drinks brands and as well as
more diversify of the products such as the ‘energy shot’ (Powerbrands, 2010). According to
various independent reports the beverage market follow the great success of energy drinks
growth had been doubling even since 1990s. Which resulted as in the recent years saw the new
emerging energy brands around the globe. With the beverage industry giants such as ‘Coca
Cola’, ‘Pepsi’ and Hansen continue to diversify their energy drinks for example ‘Monster’,
‘Sobe’ (ResearchWikis, 2008).
Despite the growing number of new competitors, Red Bull is still one of the best well-known and
the best energy drinks sold in the world. According to Red Bull’s company figures shown that in
2010 the total of over 4 billion cans was sold worldwide in 2010 represents the increase of 7.6%
against 2009, as well as 15.8% increased of company’s turnover from EUR 3.2 billion to EUR
3.7 billion. The sales, revenues and operation profit matched the highest company’s record sales
in 2010. The substantial increased in sales for Red Bull is not just from US and Europe market.
The fast growing sales also arrived from the other continents such as over 80% increase in Japan
market and over 32% increase from Brazil, all contributed to such a highest sales in 2010. With
additional statement from Red Bull aimed to recruit over 5000 new student employees this year
(Red Bull, 2011) to compliment its marketing and business strategy plan, this shown the
confidence of the fast growing in the energy drinks sector from Red Bull.
Other main competitors of Red Bull such as Monster which relatively new comer brand have
become top seller in the US energy drinks market outsold Red Bull (Powerbrands, 2010).
Monster energy drinks from Hansen beverage Ltd have sold worth over $484 million in 2010
which accounted for 28% increase over the previous year (Rexrode, 2011). Alongside with
already a very intense and crowned beverage market the new player around the globe Relentless
Rockstar NOS, AMP and Full Throttle also took their chances and took part in sharing sales
from this market sector too (Healthvotes, 2011).
Furthermore this growing opportunity had also attracted the various competitors from outside the
beverage industries, ‘Supermarket’ giants created their owned energy drinks brands such as ‘KX’
from Tesco (KX,2011) and ‘Blue Bolt’ from Sainsbury (Riley, 2008) which aimed to compete
the lower or bargain price with the well-established brands in package price sales. Other example
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of the diversify energy drinks competitor including Go-girl and Diabolo Loco which have aimed
for totally difference consumer audiences from the rest of the major energy drinks brands which
offering the males and sports images and names (Energy drinks review, 2011). In contrast Gogirl and Diabolo Loco aimed to capture majority of the female consumers who mainly concern
with flavors and tastes of the energy drinks. Go-girl and Diabolo Loco have instead introduced
the variety of flavors such as ‘blueberry lemonade’, ‘dragon fruit plum’, ‘peach tea’ and ‘lemon
drop’ etc (GoGirl, 2011). Both of these brands also offered more satisfaction of the taste, lower
caffeine and more vitamins and minerals to their drinks. Again both Go-girl and Diabolo Loco
gained the success and received great feedbacks from consumers in US because their
combination of taste and the ‘kick’ effect that energy dinks promises.
Figure 1.2 Diabolo Loco fruity energy drinks
Figure 1.1 Go-Girl energy drinks
However despite the rapid growth in beverage sector sport and health drinks can be damaging in
the long-term if the continuing of economic recession and the premium costs. Various criticisms
and questions on whether the consumer will continuing to purchase the energy drinks which is
one of the most expensive and premium beverage per litre. And the important question is that
who the consumers willing to pay that premium price between $2 and $2.50 for a can of energy
drinks raise uncomfortable decision for consumers during this economic downturn
(Knowledge@Wharton, 2009). But at the moment the energy drinks market continuing to grow
due to the ability of gaining wider range of consumers which majority led by the young
professionals (Agrawal, 2011).
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(b) the consumers target group
In the beginning of the energy drinks was originated from Asia. The main purpose of the energy
drinks in those days for example Lipovitan D and Red Bull was to serve the extra energy for
physical improving strength for the Blue collars and Asian truckers who needed to keep awake
while driving through the night (Knowledge@Wharton, 2009). But soon after the worldwide
expanding of the energy drinks to US and Europe in during 1980s and 1990s where the sport
drinks already existed on sales market such as Lucozade and Gatorade which aim and purpose is
only focus on the serious physical or traditional sports such as athletes sports, American football
etc. This was the second generation of the sports drinks which throughout their campaigns and
advertising were closely related to great sports events, Olympic and NFL American football
league (Rouse, 2010). The worldwide launched of Red Bull led by the Austrian marketing genius
‘Dietrich Mateschitz’ who decided to twist the traditional image of ‘energy drinks’ to the new
and exciting associated with prestigious and extreme sports instead (Dolan, 2005). This was the
start of the revolution and uniqueness personality of energy drinks we known today (Kastner &
Partners, 2005). This allowed energy drinks are experiencing the rapid growth due to the
increasing in popularity (Factexpert, 2011).
Today the majority of energy drinks
industries are targeted at consumer’s age
under 35. The recent studies shows 65% of
the energy drinks market consists of male
consumers (ResearchWikis, 2008) and
targeted to teenagers to young professionals
ages from 18 o 34 and 34% are age between
18 to 24 which the generation of ‘on the go’
lifestyle. And according to various studies
shows that about 50% of college and
university students consumed at least 1
energy drink per month in the hope of
helping to compensate for a lack of sleep
and even consume to mix with alcohol
despite knowing the possible danger side
effects (Richardson, 2008).
Figure 1.3 Teenage consumers
Therefore in order to continue gaining more popularity the majority of the energy drinks brands
have now advertising and set campaigns accordingly to these specific consumers and in some
cases created their brands to gain the attentions from these group of consumers all together some
examples being Full Throttle, Ammo, Havoc, Hydrive, and Morning Spark (Energy Fiend, 2009
). There are so many diversify energy drinks products due the growth of the market, even so such
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as some energy drinks have now expanding all across every age, sex, and taste of consumers, so
much so that in 2007, ‘Bloom Energy’ was the first to introduce the energy drinks that devoted
the whole of its brands taste and concepts to females only.
And other household sport drinks brands,
‘Lucozade and Gatorade’ are keen to take
part of this market via advertised their
products’ ability of increase physical
performance and reduce fatigue in highendurance sports. Other new emerging
energy drinks brands also find their niche
and more alternative choices for consumers
such as being all natural, organic, or as well
as diabetic- or vegetarian-friendly or even
go on other totally opposite route as some
even attempted as far to create energy drinks
combination with alcohol despite the health
concern reports (Heckman, 2010). In the
next chapter the author will present with the
background and other business fundamental
aspect of why Red Bull had become one of
the most well-recognized energy drink brand
in the world.
Figure 1.4 Energy drinks-market shares in 2005
II.
History and Current position of Red Bull
The history of this phenomenal success of ‘Red Bull’ was started in 1962. The original Red Bull
was developed in Bangkok based, Thailand: ‘TC Pharmaceutical Industry Company Ltd.’. Their
original drinks called ‘Krating Dang’ which means ‘Red Bull’ in Thai (U21 Global, 2009). The
original ‘Krating Dang’ was first sold as a cheap tonic in small ready to drink in brown glass
bottle, was very popular among Thai factory workers and especially to blue-collars and truckdrivers. This was due to the cheap price of 150ml glass bottle is US$0.30, in comparison, a
250ml can of Red Bull retails in the US for around US$2 and in Europe, and the ability of the
beverage like no other with its increase physical endurance, improve concentration and reaction
speed abilities, ‘Krating Dang’ become one of the best beverage seller in Thailand and the
neighbor countries surround to it ((London Business School 2005).
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In 1982, Dietrich Mateschitz, a toothpaste salesman and the Austrian marketing genius, came to
aware the mass-fat growing energy drinks market when the trip to Thailand. He brought back
many of the energy drinks example. Later he was sold on the ‘Krating Dang’ brand as it took
away his ‘jet lack’ (Funding Universe, 2002). Later Dietrich Mateschitz proposed his idea of
expanding ‘Red Bull’ the global brand energy drinks. He then form Red Bull GmbH, with the
former founder of Krating Dang, Chaleo Yoovidhya, and his son with each taking 49% stake and
Chaleo’s son taking the remain 2% (BBC Secrets of the Superbrands, 2011).
Dietrich Mateschitz was keen to introduce ‘Red Bull’ brand around the globe. As he realized that
the first or traditional energy drinks market in Thailand and the countries around it still continue
going to grow with various local competitors, but he soon recognized the whole new type of the
modern energy drinks, for the worldwide consumers such as in the US and Europe. However
despite the no existing new generation of ‘energy drinks’ worldwide, as the quote of his
statement that ‘even though no such market existing, but we will create one’ (U21 Global, 2009).
The contract was TC Pharmaceutical Industry Company Ltd will provided with the drinks
formula with the twist (not as concentrated as original Krating Dang) with less syrupy, gave it
more fizzy, later then adopt the packaging from traditional glass bottle to 250ml Blue and Silver
can, which indeed became its signature colors and theme for Red Bull image. After Red Bull
introduce to the worldwide market in the US and Europe, a market research was hired to test the
market for energy drinks. Despite the results from research as neither like the taste nor taste, but
choose to ignore, as Mateschitz saw from the research surveys that 50% of those respondent was
totally went crazy about Red Bull. Red Bull brand was launched with the slogan ‘Red Bull gives
you wings’ which became the theme of Red Bull’s promotional campaigns (D, Jobber and J,
Fahy, 2009).
However the major obstacle for Red Bull was concerned with health regulatory approval in some
countries. This was due to the unfamiliar ingredients known in Europe, had taken Red Bull three
years to analyze and create a new formula before it was finally got approval from Austria’s
ministry of health. Red Bull GmbH was first granted the establishment in 1987 in Salzburg,
Austria. After the successful result in Austria, Red Bull has expanded its sales in near-by
European countries with Hungary, UK, Slovenia, Germany and Switzerland in the early 1990s
then gradually throughout the rest in European countries. Other obstacle for the Red Bull in that
time was still the issues of ‘Taste’. However with the new emerging of new wave of sports and
the increasing of young urban professionals, who often work long-hour, Red Bull had adopt its
positioning and concentrate its products on those new comers, have brought it to become the
instant hits and had received very positive response from the overall beverage market. (Upgrade
reality, 2009).
Red Bull claimed of its unique combination of high quality ingredients in Red Bull energy drink
and the benefits of drinking its products such as: increase in performance, increase concentration
11
and reacting with speed, improve vigilance, makes you feel more energetic and thus improve
overall well-being, and lastly its slogan related ‘stimulation’ ability (Red Bull: Products, 2011).
Red Bull enjoys the ‘number one’ energy drinks ‘top seller’ in value. It sold over 4 billion cans
of Red Bull in 2010 and has operated sales over 160 countries across the globe. And despite the
economic downturn still very much exist, Red Bull have confidently announced its plans for
growth and previous plan for investment in 2011 remain just as ambitious as well as envisage a
continued upward trend (Red Bull: Company Figures, 2011).
The fundamentals aspects behind Red Bull’s phenomenal success can be pointed out in three of
its capabilities and strategies.



Innovative products
Marketing Strategy
Positioning
The successful story of Red Bull as shown above that, it could not have started from only the
great product on its own from the start. The successful story of Red Bull is highly relevant to
other innovative factors and vast amount of funds spent on its products campaigns and
promotions that separate Red Bull from the traditional energy drinks, or even the household
brand recognized in energy drinks to date despite notorious giant beverage competitors. One of
the examples of its success was the early opportunity of Red Bull to establish its brands that
different than other competitors, the ability of Red Bull brand to generate positive ‘word of
mouth’ thorough its target consumers (Cheryl, 2011). In the later part will show in details of
what and how Red Bull has adopted those aspects to the success.
Figure 2.0 Original Red Bull in Thailand
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III.
Reasons behind the success of Red Bull
(a) Innovative products
One of success reason of Red Bull was down to its innovative products from the beginning of
Red Bull compared with its original Krating Dang recipe which was non-fizzy drinks. Red Bull
formula with fizzy and added vitamins, those innovated ingredients allowed Red Bull more
appeal to wider range of consumer groups (Lloyd, 2011). All of it products basically contain the
same basic ingredients: Taurine, Glucurolactone, Caffeine, B group vitamins, Sucrose and
Glucose, which help to stimulate physical strength and enhance mentality reactions. Basically
there are two types of Red Bull products which are its original and sugar free drinks in four of its
different products: Red Bull original energy drink, Red Bull sugar-free, Red Bull Cola, and its
new comer- ‘Red Bull energy shots’ (Red Bull: Red Bull energy drinks, 2011).
Red Bull is well known of being exciting and innovate company, the launch of such a revolution
product such as ‘sugar-free’ version which Red Bull is one of the first to introduce this to energy
drink market in 2003 and ‘energy shots’ in 2009 saw the phenomenal success and great feedback
from consumers. Red Bull have introduced the enhanced and more concentrated formula in to
smaller package again with same blue and grey color theme, called ‘energy shot’ (Brown, 2009),
which contain with 60ml with 80mgs of caffeine (Red Bull: products, 2011). And according
from many reports that energy drinks was expected to worth around $560 million in 2008 and
reported the average growth of 9% in the US since launched (Powerbrands, 2010), which
majority of sales generated from drugs stores and truck shops.
Figure 3.0 Red Bull’s main products
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variety of drinks can be categorized with
diverse of target consumers. The energy shot
shots appealed to slightly different type of
consumer from original energy drinks
consumers. However with the ability to
satisfy other type of consumers, in
additional supermarkets and retailers
favored energy shots as they not required to
be shelved on the retailers’ cooler space
along with traditional energy drinks. The
energy shots main consumer targets are
truck drivers and yuppies alike. They were
so diverse even trick the air-travelling flight
regulation that passengers able to bring them
on board and yet still as effective on
stimulate promise ability. And finally energy
shots gain the production advantage of
reducing production cost on smaller quantity
of liquid amount in each package
(Klineman, 2008).
Figure 3.1 Red Bull Energy shot
This concept of energy shots has become so
successful that in 2009 over 70 brands were
introduced their own energy shots to the
market (Nutrition Business Journal, 2009).
The energy drinks concept was commonly
compared with coffee drinks concepts, the
According to the report from ‘New nutrition business’ that one of the fundamental factors of
become successful of energy drinks brand is crucial that company should be able to create ‘new
category’ of the related products, however rarely only few beverage/energy drinks are able to
achieve that. Red Bull managed to tap into some of energy drinks diverse market. However Red
Bull is still less successful on creating other related channels or keeping innovative products
compare to its peers. Many Red Bull competitors managed to create and introduce ‘niches’
products, Diabolo Loco and Ocean spray are few of examples of niches energy drinks products
and aimed to capitalized on this sector. This new type of energy drinks are heavily relied on the
preference of ‘taste’ and ‘organic’ presenting the more alternative healthier theme to energy
drinks which able them to gain totally different type of consumers (New nutrition business,
2008).
Despite Red Bull is one of the first brands to introduced Sugar-free energy drinks, however
received not so substantial success and was banned in France and Denmark due to Red Bull was
lack of research on the impact of its ingredients. The most difficult struggle of launching
innovated products from Red Bull was ‘Red Bull Cola’ which received huge negative banned
and feedback from Germany where in 2009 Authorities in the states of Hesse and North-Rhine
Westphalia ordered retailers to stop Red Bull Cola after found traces of cocaine,' said Bernhard
Kuehnle, head of the food safety department at the federal ministry for consumer protection
14
(Hall, 2009). These un-careful plans from Red Bull have created such a negative impacts on its
brands and products image and as well as Red Bull lacking the ability to expanding more
diversify products, Red Bull are likely to have an difficulty and the uncertainty future laid ahead.
(b) Marketing strategy and Positioning
Red Bull’s success was unendingly due to
its genius marketing strategy, so much so
that the company was enclosed its strategy
plan from expose to the public as much as
possible. And so much so that Red Bull was
described to achieve the brands recognized
as ‘family members’ which in the ‘BBC
Secrets of the Superbrands’ in 2011
programmed was investigate into the famous
brands such as Coca Cola, Heinz, McDonald
and Red Bull are among one of the most
well-known and well-aware brands ever.
The reasons of these achievements were
from heavily marketing strategies which tied
consumers to involve and anticipate with
their brands. According to the report from
BBC, Red Bull is one of the biggest
spenders in advertising, pushing its brand to
as much the audience receivers of Red Bull
brands as possible. Red Bull UK expresident told that the company will spend
around 25% of its revenue on marketing and
advertising alone.
The revolution of advertising products was first experience by Red Bull back in 1987, with the
slogan ‘Red Bull gives you wings’, back then the fund was fed by 90% from two co-owners and
10%bank loan. The slogan and its ‘cartoon’ advertising campaign were intended to reinforce
brand identity rather than create brand awareness (London Business School, 2005). Ambitious
Mateschitz realised the only market in Austria was too small in scale of sales, the only success
for Red Bull have to be only expended to European countries nearby an creating the total change
of perception towards Red Bull brand instead. The new marketing strategy was introduced in the
beginning of 1990s. The plan was now started by allowed consumers to experienced Red Bull
energy drinks as many consumers as possible. The positive feedbacks of its image seen as ‘cool’
and ‘young’, ‘hip’ which majority well-feedbacks from those in male teenagers consumers. Red
Bull realized that by having an effective ‘Buzz’ (Helm, 2005), or generated the ‘word of mouth’
among the consumers will be the best way for its revolution marketing strategy ever (Dolan,
2005).
Red Bull started recruiting ‘young sale teams’ provided with free cases of Red Bull energy
drinks to an influential such as, trend-setting collage students, what Red Bull sale team founded
out the behaviors of these collages and university students was that majority of them had highly
nightlife socials. And by throw parties or their classmates and friends allowed Red Bull products
to be tried out among its target groups (D, Jobber & J, Fahy, 2009).
15
One of the business and marketing strategies of Red Bull was to create the purchasing power
from the target consumers. Red Bull understood the ‘basic needs’ of the consumers, the needs of
consumers to purchase energy drinks products were led from the fundamental benefits when
consumers get from drinking energy drinks, such as enhance mentally ability and general
stimulate ability. Those were the known benefits that consumer already aware. However by
understanding its consumers target groups, in term of what make its they different from the rest
of consumers, where Red Bull able to generate more than just ‘basic needs’ that is ‘wants’ aspect
of purchasing. ‘Wants’ is the form that taken by ‘human basic needs’ as taking shaped by culture
and individual personality (Scribd, 2006).
Therefore Red Bull was aiming to set up its own ‘individual brand image’ to separate its brand
image from the rest of energy drinks competitors. The majority of Red Bull consumers are
among the age between 18 to 29 year olds, or known as ‘Generation Y’ who have highly
socialize lifestyle (London Business School, 2005).
The completion for segment is vital according to Palmer, 2009. It was always happen that the
more potential and more profitability of business segment always attracted more and more
competitors, and various companies were ending up copying same strategies and doing exactly
the same business activities of each other. Soon highly attractive segment can easily consider to
as a ‘non-attractive’ segment.
Red Bull have certainly achieve of creating distinctive brand, the brand logo and name are one of
the most influential aspects as once the brand was formed then it is very much difficult to change
it again, and the great branding always help your products distinguish and stand out from the
crown. The brand image, name and logo should consistency with the products’ descriptions and
their product ranges (Palmer, 2009). Red Bull’s logo with two thick-necked crimson bulls in
opposing charge against a yellow sun was certainly the epitome of kinetic virility and pugnacity,
as well as the ‘Red Bull’ sound as itself most fitted for the energy drinks market (London
Business School, 2005).
As the research from ResearchWikis in 2008 shows approximately 65% of the energy drinks
consumers are males, and 34% of overall consumers were male teenagers and young
professionals. Red Bull has adopted its marketing strategy accordingly to that consumer target
and carefully detailed for exploit its marketing strategy plan as precise as possible. Even the plan
on recruiting sales-teams only offered to the appropriate ages (young professionals), but also
emphasize on ensuing those Red Bull brand ambassadors were athletic and stylish also, therefore
they can carried out the correct brand images to the consumer audiences wherever they go (D,
Jobber & J, Fahy, 2009). The recruiting those young professionals have continued till date (Red
Bull: The company, 2011). The plan f recruiting ‘Student brand manager’ as well as other
position in Red Bull organization, Red Bull lunched a programme at various university campuses
across UK and the US. The employed university students then reported back the feedbacks on
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those Red Bull target consumers with market research information, with additional benefits as
non-sales pitch image of those student employees attached to the scheme.
With the understood Red Bull concepts and
consumers behavior analysts, Red Bull also
aimed to created he DJ culture where Red
Bull planned to set it image and
‘positioning’ evolving in those target
consumer cultures. Offering the free cases of
Red Bull to a ‘cool’ personality such as DJs
, trendy bars and pubs as well as in garbage
cans outside selected nightclubs, with the
aimed theme of the ‘on the edge’, ‘partying’
and ‘enjoying’ to achieve the dynamic
amongst the music industry and built
something that was generally respected. In
middle of 2000s Red Bull marketing
strategy have gone further un-imaginable
length, Red Bull hired consumer education
teams to drive ‘fancy’, ‘in-trend’ vehicles
painted with it signature blue and grey,
logos and the giant size of duplicated Red
Bull an mounted on them. Red Bull
education teams hit the streets all over many
countries, where offering free cans of Red
Bull to ‘those who in need of energy’
commonly around ‘truck stops’, ‘office
buildings’, ‘gyms’ and ‘construction sites’
(London Business School, 2005).
Figure 3.2 Red Bull marketing strategy
However to become the ultimate energy drinks of all, Red Bull have tried to achieve its products
to ‘suit for everyone’ (Helm, 2005). Due to its premium prices various range from $0.96 to
$1.90, Red Bull drinks were positioning on the premium energy drinks in its market sector
(ResearchWikis, 2008).
To be able to captured other consumer target, those who able to afford the premium asking
prices, Red Bull have applied it product positioning to align with its asking price by a mass
amounts of investment into buy-out two of its own racing teams in prestigious sport of Formula 1
and Red bull owned football team of Salzburg, and due to its continuing funds and its
contributions to the sports, Red Bull racing formula 1 teams able to secure many wins in last few
years. The determination and passions of sports from Red Bull are visible clear as the interview
from ex-president of Red Bull UK stated that unlike other giant companies such as: Coca Cola,
Pepsi etc who only invested into sports as a ‘sponsors’, and only contribute in term of investment
funds to secure the brand visibilities to consumers, Red Bull on the other hand had bought out
teams and took total control the whole operation, in productions and sport strategies and
17
trainings themselves, shown how serious Red Bull and its passionate into sports (Upgrade
reality, 2009).
Figure 3.3 Red Bull Formula 1 team
Figure 3.4 Red Bull Air Race
Figure 3.5 Red Bull Extreme sports
18
Figure 3.6 Red Bull Salzburg Football Club
However Red Bull also not shown how important its existing ‘Generation Y’ via sponsored
various types of ‘Extreme sports’ such as ‘Red Bull Air racing’, ‘BMXing’ and ‘Red Bull-cliff
diving’ (Healthvotes, 2011). Red Bull spent over $80 millions into extreme sports each year,
sponsors over 500 different types of athletes and along with motor racing academy, number of
‘sports museums’, its own television programme, certainly help promoted Red Bull brand and
image seen by worldwide audiences and winning the ‘cool’ image from its consumers.
However despite those successful marketing strategies and its welled products positioning, Red
Bull business strategies can be biggest treats by its major competitors. Some of Red Bull giant
competitors such as ‘Coca Cola’ and ‘Pepsi’ who now the fearsome players in energy drinks
market themselves, are capable funds available and able them to copy Red Bull’s business
strategies such as: the huge amounts of funds and sponsors (Scribd, 2006). In the later part of this
dissertation will have the discussions into Red Bull competitors and future threats in dept details
and analysis.
IV.
Red Bull’s competitors
It is normal that the more attractive market is the more companies will seeking for come and try
to take their hands in that market share (D, Jobber & J, Fahy, 2009). With the increase sales over
75% since 2000 (BBC News, 2005) making energy drinks sector is one of the fastest growing
sector in beverage market. The research from Mintel shown that 1 or every 5 GBP spends in
beverage market were from energy drinks sector, and by 2010 the energy drinks market
19
estimated worth over $32 billion which can be indicated the increase sales of 33.7% in the US
and 18% increased in Europe (Merett, 2007).
The potentially success in this market sector led to an onslaught of new competitors, in 2003
there were 23 new energy drinks were introduced to UK, and some reports shown that in 2009
there were more than 300 varieties of energy drinks representing more than 200 brands in the
United States alone (Heckman, 2009). Many researches shown various ranks on the top energy
drinks seller in 2010 and 2011, however Red Bull always in the top five best sellers. According
to BevWire, 2011, ‘Red Bull’ and its closest competitor ‘Monster’ was number one and two on
the best seller energy drinks in 2011. However in 2010 Red Bull is still the leader in energy
drinks market in term of dollar sales only due to its premium retail prices (Powerbrands, 2010).
Due to this market sector was so profitable in the last decade, therefore have brought the
attention from giants beverage marketer such as Coca Cola Co, and Pepsi Co joined energy
drinks sector (Funding Universe, 2002). The increasing in number of competitors has causing the
sales of Red Bull come to a substantial decrease. The Red Bull’s share of sales energy drinks
market in 2000 was accounted for 86% (London Business School, 2005). As seen in Figure 4.0
from Energy Fiend, 2009 that Red Bull shares in energy drinks sector have continued to
decrease.
Share of Energy Drink
Market
Drink
Share of Energy Drink
Market
Drink
(% dollar sales)
2006
(% dollar sales)
2007
Red Bull
42.6
Red Bull
35.2
Monster
14.4
Monster
27.3
Rockstar
11.4
Rockstar
11.1
Full Throttle
6.9
Full Throttle
6.6
Sobe No Fear
5.4
Amp
5.1
Amp
3.6
No Fear
2.7
Sobe Adrenaline
Rush
2.9
NOS
2.1
Tab Energy
2.3
Adrenaline
2.1
Monster XXL
0.9
Sobe
0.6
Private Label
0.9
BOOKOO
0.6
Rip It
0.8
Arizona
0.5
Sobe Lean
0.7
Lost
0.5
20
BooKoo
0.5
Rip It
0.5
Sobe Superman
0.4
Vitamin
Energy
0.5
Von Dutch
0.4
Jeff Gordon
24
0.5
Share of Energy Drink
Market
Drink
(% dollar sales)
Drink
Coming soon
Share of Energy Drink
Market
(% dollar sales)
2008
Red Bull
40
Monster
23
Rockstar
12.3
AMP
8
Full Throttle
4
Doubleshot
2
NOS
1.5
No Fear
1.4
Private Label
1
SOBE Adrenaline
0.7
Vitamin Energy
0.5
SOBE Lean
0.5
Venom
0.44
Jolt
0.4
Go Girl
0.4
2009
Figure 4.0 Top 15 Energy drinks in 2007
With hundreds of competitors among this market, the treats to Red Bull seems as will be
continue. In this chapter will investigate into some of the Red Bull’s competitors. The author
chose these three of Red Bull’s closest competitors who were almost identical in business plans
and strategies, etc. to Red Bull.
(a) Monster
Monster energy drinks was first introduced back in 2002, and it a part of one of the top three
giant marketers in beverage sector. Monster energy drinks is one of the sub-brands owned by A
Californian, American beverage giant ‘Hansen Natural Corporation’ (Energy drinks review,
21
2011). Hansen Corporation produces numbers of variety of RTD (ready to drinks) products such
as natural sodas, fruit juices and juice drinks, several of energy drinks and energy sports drinks,
fruit juice smoothies and functional drinks, non-carbonated ready-to-drink iced teas and
children’s multi-vitamin juice drinks. Previously the acquired with California Co Packers
Corporation back in 2000, formed ‘Hansen Natural Crop’ allow company to increase their
production capacities and well as allowed them to launch numbers of RTD products, the
financial record of Hansen Crop was listed in Forbes top list of 200 best companies in USA. The
company now owned several distribution factories across the US as well as Europe and Asia
(Reuters, 2011).
Monster energy have followed the business principle of Red Bull, by creating its own identity in
visually with its large black 16oz can (rather than 12oz from Red Bull) with distinctive elixir
with the neon ‘M’ logo. The fundamental rules of energy drinks was also down to the image and
sound of ‘brand’, ‘Monster’ and ‘Red Bull’ and its slogan ‘unleash the beast’ which sound as
they are born for males and sports personalities (Rexrode, 2011). After the launch of Monster
drinks back in 2002 the brand made double on sales every year since, that sales figures help
Hansen earned No. 26 spot on Businessweek’s annual ranking of ‘hot growing business’.
However first attempt from Hansen back in 1997, when Red Bull launched in Europe and US,
Hansen have been observed the amazing growth of Red Bull sales and decided to take on Red
Bull by launching its own brand ‘Hansen's Energy’. The financial sales of Hansen were rather
devastated compared to Red Bull’s. Unlike Red Bull where spotted the opportunities to sponsor
the sport events, Hansen's Energy failed to strike a chord with core energy-drink consumers,
such as college students and action sports fans. The re-lunches of its new energy drinks as
‘Monster’ label in large 16oz can nearly twice the size of Red Bull, roughly is the same prices
but twice the quantities (Bloomberg, 2005).
Figure 4.1 Monster energy drinks
22
Hansen Monster energy drink is currently
‘mountain bikes extreme sport’ as well as
No. 2 behind the Red Bull in the $5.7 billion
sponsors well know celebrities sport persons
energy-drink category. Currently there are
such as ‘Ken Block’.
24 variety types under name of ‘Monster
energy drinks’, various from Original energy
drink, sugar-free version, several of natural
flavors added, to ‘Coffee energy drinks’
(Monster Energy, 2011). After the first
attempt from Hansen on introduced the
energy drinks was failed, Monster have leant
and adapted its strategies almost identical to
Red Bull’s. Monster energy had the
marketing and business strategy campaign to
suit ‘young and edgy’ type of consumers.
Figure 4.2 Monster energy drinks’
Monster have numbers of sponsors into
Motorsports sponsors
extreme sports, such as ‘rally motor sports’
All of Monster’s sponsor and campaigns allowed the same ability of advertised its brand across
the worldwide consumer audiences (Boyle, 2006). At the results of this massive marketing
campaigns and sponsors, now Monster is one of the most recognizable energy drinks in Europe
and US. The financial report from Forbes show the sales revenue on the third quarter of Monster
energy had well exceeded over $484 million out sold Red Bull and many of its major rivals, in
additional by owned numbers of distribution centers, Monster is considering to be the priority
competitor that Red Bull should indeed concern.
(b) Relentless
Relentless energy drink was relatively new player in energy drinks market, introduced in 2006.
Created by Coca-Cola Company, Relentless energy drink had a distinctive taste of ‘sweet’
compare to other energy drinks, the distinctive large bottle (500ml), extremely large proportion
compared to its viral. The reason behind the large proportion is aimed for those consumers with a
need of strong stimulation (Coca-Cola: Great Britain, 2011). Once again the distinctive brands
and slogans proved especially pivotal in this sector. The edgy and catchy name like ‘Red Bull’,
‘Monster’ and ‘Relentless’ made these brands certainly attractive to ‘Generation Y’, male
consumer (Gosling, 2011).
Like ‘Monster’, Relentless also offered variety of energy drink products, as well as the original
energy drinks, sugar-free version, energy shots, also with added mixed soda, added flavors, or
even some drinks contained 50% juice (Relentless, 2011).
23
Figure 4.3 Relentless energy drinks
With the well-experienced controlled by the largest beverage marketer: Coca-Cola, Coca-Cola
also saw other important aspects in introducing the new products to the market and how to create
ad great advertising campaigns. The attentions in details can be seen from their aimed to create
an eye-catching insignia over a single side of the pack opposite the original logo which said
Coca-Cola that would provide striking stand out for the range as a retail display (Goldstein,
2011).
Figure 4.4 Relentless energy drinks extreme sports
sponsor
Figure 4.5 Relentless music festivals
24
As well as some familiar marketing strategy with the rest of energy drinks competitors, relentless
also heavily sponsored various extreme sports, such as recently sponsors of the North West 200
international road races (BBC sports, 2010) and other extreme sports, BMX street contest, world
cup skate contest etc, as well as promoted and sponsored major music festival, become the host
for the well known ‘Glastonbury’ named ‘Relentless energy drink NASS festival’ (Blanco,
2011). Again after the much invest into marketing and advertising campaigns Relentless
continues sales growth, Relentless currently estimated to be worth more than £52 million. CocaCola aimed to expand other additional drinks under Relentless brands in the future (Coca-Cola
enterprise ltd, 2011).
(C) Rockstar
Rockstar energy drink based in USA and was introduced in 2001. Due to the opportunity of fast
growing energy drinks market in USA. From the beginning of it launch the energy drinks market
which by that time already crowned with hundreds of products. Rockstar marketed itself in such
a way to differentiate its products as much as possible. By offered a better value than its main
rival (Red Bull), twice the size but similar sale price, as well as the first of the energy drink
brand to offered variety of flavors added. At the moment Rockstar have many diverse products
similar with Relentless and Monster with additional coffee versions and other healthy energy
drinks with natural juices added. Rockstar had great growing since launched in 2001 and in 2009
Rockstar sold over 20 countries worldwide (Hein, 2009).
Figure 4.6 Rockstar energy drinks
However with its rapid expansion generated the disrupt problem with its distribution capabilities.
In summer 2009 Rockstar switched its distribution license from Coca-Cola to Pepsi, due to
Coca-Cola in favor over the license from Monster energy drinks instead. Since join Pepsi, who
already owned numbers of energy drinks under its corporate such as: ‘SoBe’, ‘Mountain Dew’
25
and ‘AMP’ (Gorge, 2009). In 2009 after Rockstar licensed its distribution to Pepsi, led to the
merging between tow companies saving cost of productions as well as regain the brand power
for Pepsi Co (MacMillan. R., 2010).
Figure 4.7 Rockstar’s sports and games sponsors
Like its competitors Red Bull, Monster etc, Rockstar had also invested mass amount of its funds
through sports sponsors, numbers of music tours and sponsors digital gaming to attract
Generation Y consumers as well as younger generation due to the its lower prices.
Other competitors
Due to some forecast on the growth of energy drinks market can be worth $9 billion in 2011
which accounted for approximately 440 % increase since 2002 (Nacs online, 2007). It was no
wonder Red Bull which was one of the earliest energy drink brand faced hundreds of
competitors. Apart from the main competitors which among them owned various numbers of
energy drinks, AMP, Mountain Dew, Gatorade, SoBe, etc (PepsiCo, 2011), were all almost
identical in their business strategies, business plans, brand images, and pricing. Other energy
26
drinks in contrast focused on totally different consumers all together. According to the forecast
trend of the energy drinks market from ‘new nutrition business, 2008’ analyst that the trend of
future energy drinks will certainly be more diverse, majority of existing brands and emerging
brands will seek their ‘niche’ sectors such as ‘natural energy’ or ‘females energy drinks’. Some
relatively new brands such as ‘Go-Girl’ and ‘Diabolo Loco (advertised itself as the energy drinks
that concern of educate consumers with its healthy energy drinks) (Energy drinks review, 2011),
as well as giant competitors such as Relentless and Rockstar have now created their niche sector
by focused on female consumers.
Figure 4.8 ‘Go-Girl’ female consumers
Other energy drink brands have gone one step further to re-create energy drink added with
alcohol such as Anheuser-Busch’s new drink 180. One of the reasons that many energy drink
companies tried create niche market sector not only driven by the sales shares from energy drink
market, but also the fact that majority of energy drink no matter which brands are vertically
similarly the same in ‘taste’ some have more sweetening, some offered more variety of flavors
(Fact Expert, 2011) furthermore most brands contained fundamental ingredients and promised
the identical their drinks effects and abilities to boost energy (Consumer research, 2009).
Other than those main competitors from giant beverage and other experienced beverage energy
competitors, in recent years the market have witness the growing power of the supermarkets.
Supermarkets and Retailers were automatically having the advantage of limited the shelves’
spaces, gaining on the bargaining power for products that sold via them. Recently most of the
supermarket giants such as Tesco, Asda, Sainsbury, etc launched their own energy drinks brands,
such as KX and Kick from Tesco, Blue charge from Asda and Blue volt from Sainsbury. The
27
bargaining advantages from being giant retailer themselves resulted of their own products at the
much lower price than other independent brands (Healthvotes, 2011). In contrast with the
majority of energy drinks such as Red Bull, Monster and Rockstar which priced in retails and
supermarkets at approximately nearly £2 per can but the supermarket own energy drinks priced
at less than 3 times at those household brands, at less than 50 pence per can (Energypirates,
2010).
These own branded products from Supermarket are well considered to be a long term battle for
those established energy drinks like Red Bull, Monster and even some beverage giants. So did
Red Bull feel threatened? In many cases Red Bull have challenged to the extreme length from its
competitors even via replicate the similar names which can lead to confusion such as ‘Red
Rhino’, however Red Bull legally won the challenges over trademark infringements. Mateschitz
stressed not much worry of the question on the threats from Red Bull competitors, said the
market is not generic; it does not exist if we do not create it. It is a branded market (London
Business School, 2005). However even in the recent years with hundreds of newly emerge
competitors every year. Red Bull financial performance have shown decline in the last few years,
he author will analyst further issues of what else have threaten Red Bull’s future.
Figure 4.9 Tesco’s energy drink (KX) and Asda’s energy drinks (Blue Charge)
28
V.
Future challenges for Red Bull
Apart from growing number of competitors in energy drink market which already threats the
lower sales for each of energy drink companies. Yet other long standing issue against energy
drink always related to the negative impacts of the side effects from consuming these energy
drinks.
(a) Health concerns
There have been numbers of researches by the government institutions, universities and private
investigators which mostly shown much of the negative rather than the majority of energy drink
companies claimed to delivered as the positive impacts. The energy drinks ingredients are
commonly consisted of high level of Caffeine and Sugar, the ingredients themselves already
been much of the negative images of the consumer products. The positive promises from energy
drinks are meant to enhance mental and physical stimulation for a set period of time and are
mainly used during the time of strenuous physical activity and to satiate thirst. However,
majority of energy drinks do not hydrate the body instead they often lead to dehydration
(Freeman, 2009).
The confusion among the suitable consumers who should be aware of the danger of energy
drinks is various. As if the prolonged consumption of energy drinks can also lead consumers to
the habit of addiction, majority of energy drinks on sales today are primarily suitable for the
consumer target who interacting with only ‘extreme sports’, who needed a quick burst to
enhance their abilities in the short term periods. However most of the researches pointed out the
possible long term effect on consuming energy drinks. The concerns were raised due to the
majority of energy drinks consumers are the aged between 18 to 30 years old or known as
Generation Y, considering as the youth consumers who according to many government
institutions and university researches strongly advices and encourages these young consumers to
aware of the negative side effects in the long term health problems (Parker, 2011).
As the energy drinks are commonly consumed worldwide, according to David Ellis, a
sports nutrition expert and registered dietitian who train both collegiate and professional football
players had expressed this concern about the attitude athletes take toward energy drinks. Ellis
mentioned that there is no get away from these energy drinks, as they appeared in every locker
room. It is true that energy drinks delivered what they promised of their benefits, but only to who
that needed, for example the extreme sport persons, a footballers and other athletes are the most
obvious of the energy drink products. However while consuming much amount of energy drink
in the daily basis in such case of Steve Bechler, a 23-year-old pitcher with the Baltimore Orioles
in 2003 collapsed during his work out sessions, after have been reported from local hospital
confirmed that the energy drinks ingredients in this case contributed to his risk of heatstroke. In
this case was in fact led to other non-direct related negatives effects of the energy drinks, from
29
the interviews among many athletes found out that the energy drinks sometime kept stimulating
through the early morning time, 1 or 2 am in fact, the questions asked what then these athletes
did when unable to sleep at nights occurs, the solution was to winded down with alcohol drinks
which eventually help them falling asleep, these also led them to other health problems
(Severson, 2006). In some other reported was raised concern from Johns Hopkins University that
one of the 28 years old male had cardiac arrest due to consumption of caffeine and taurine
containing in energy drinks, plus arduous physical activity has contributed to his fatal heart
attack in 2007. Some of these incidents caused by the lack of control from some government
institutions or the loop hole in consumer law, for example in the US, not every energy drinks
have to be approved by the U.S. Food and Drug Administration (Farley, 2009).
Red Bull is one of the most focused among the negative health effects among the rest of energy
drinks on the market. This could possibly be because of it ‘icon’ of worldwide energy drinks.
Not surprisingly Red Bull has been reported far worse than some of its competitors, for instant,
Red Bull have been banned from selling via many European countries. Red Bull came to the
health concerns spotlight since in early 2000; Red Bull was struggling on receiving approvals
from numbers of European countries. The major accuses of banning Red Bull or other energy
drinks were always concerns with the number of death rates that potentially caused by
consuming energy rinks (B5Media, 2008). In 2004, French ban Red Bull drinks as discovered
Red Bull drinks might have been related to the contribution on causing several deaths, however
the European court of Justice had challenged French government that had no right to upheld or
ban Red Bull from selling but have adjust the energy drinks effects via forced Red Bull to carry
'high caffeine content' warnings, however this incident was one of the first negative image of the
ingredients contains in Red Bull (Medical news today, 2004). In 2009, once again Red Bull had
received the negative feedback ban from Germany of its relatively new ‘Red Bull Cola’ drink,
after traces of cocaine were found. The German consumer ministries had a direct ban in two of
its states, the German consumer ministries confirmed that despite the non-direct health threats
but the trace of cocaine were definitely not permitted in German food protection. Again Red Bull
protested its health and safety issues that the trace of the cocaine was distracted from the ‘coca
leaf’ used worldwide in foods as a natural flavoring. Later Red Bull appeals certainly in
European court and also in the US, later been approved by both institutions, however the
contradictions on the loop hole of the energy drinks were still very much concerns to date, from
this cases, Red Bull and other ban of various energy drinks has raised the awareness the dangers
of energy drinks (Hall, 2009).
However as the main energy drink consumer target group is Generation Y, which having the
frequent hobbies of Social, on the edge lifestyles, eventually much of the energy drinks were end
up mixed with alcohol in social events. One of the most criticism brands was Anheuser-Busch’s
new drink 180, with its concept of energy drink mixed ready alcohol, and also to those
individuals can still mixed highly caffeine energy drinks with alcohol on their own. The
immediate concern was raised by Journal of the American Medical Association (JAMA) as the
30
concern that energy drinks had become subculture of partying and has been linked frequently to
drinking high volumes of alcohol the harmful from serious alcohol-related consequences such as
sexual assault, drink and driving while intoxicated (Science Daily, 2011).
Due to these countless negative reports and researches many institutions have demand the
contribution from energy drink companies to provide the better understanding and communicate
the health awareness to their consumers. Researchers understood the consumers’ current
behaviors of ‘work hard, play hard’ culture, and consumers will drinks energy drinks despite
knowing the negative side effects of them (Farley, 2009). Some of the major player such as
PepsiCo who produced AMP, Mountain dew, etc argued that the company aimed to satisfy
consumers with their products with responsibly (Parker, 2011), this was the example of the raise
concern of lacking supports from the energy drink companies themselves to create awareness.
From the negative incidents, some fatal, still some of energy drink companies refused to
cooperate with authorities. It is necessary important that the awareness on the public health
regarding the high level of caffeine consumption from no matter which beverage sources.
(b) Declining sales
There were numbers of the sales forecasting and financial reports show the possibility of the
declining market in the energy drink industry, which was the expected cause from the global
economy recession. However for over a decade Red Bull with its cleaver marketing teams and
the slogan ‘gives you wings’ was both simple and memorable, summing up the unique USP of its
energy drinks in one sentence, so there for Red Bull had always achieved the top ten spots of
consumer satisfaction and top ten best selling in energy drinks market sectors. However due to
the growing sales in energy drinks sectors, the question was that energy drink market are too
crowned? With the best afford from Red Bull as they even produced their own Cola version, but
however there was no get away for long along came the beverage giants Coca-Cola and PepsiCo
to start their own energy drinks, not including hundreds of independent competitors in the past
decade, and recently supermarket own brands, which tense for Red Bull to sharing their shelf
spaces among these competitors (Health votes, 2011).
Some researchers had criticized the success of Red Bull and other well known energy drink
brands were only down to each company’s budget on marketing and advertising themselves. So
if these the only the fundamental aspect of making the success of energy drinks what the future
of Red Bull will be against the fearsome super-power competitors which are desperately to
expand their business portfolios in licensing the independent brands as well as introducing own
sub-brands every now and then (Weston, 2010). The threats from growing number of
competitors as report from Mintel suggested from 169 to 306 competitors during 2007-2008.
Even though from the early to the middle of 2000, the energy drink market have increase
phenomenally, the in the attractive market condition had already pointed out the dangers of new
competitors existing on the market, In 2008, Coca-Cola began distributing Monster Energy,
currently the second best selling brand behind Red Bull, with a 20.6% market share. In 2009,
31
PepsiCo signed a distribution deal with Rockstar Energy, the third best selling energy drinks,
with 12.9% of sales. According from Mintel reports, Coca-Cola and PepsiCo aimed to continue
expands their portfolio in energy drink market (Powerbrands, 2010) and at the same time aim to
keep their low profiles in this sector via choosing to distribute independent brands rather than
buy them outright. And there was no sign of Pepsi trademark anywhere on those brands. Their
strategies was to separate them under a different identity. As well as the question on the recent
economic down turn, which beg the question of who are willing to pay their top dollars for a can
of energy drinks? The obstacles of advertising the goodness of energy drinks was quite difficult
enough due to the negative images that energy drinks received in the past, some have even
arguing for majority of consumers in this recession period, consumers would be better off with
the pure or mineral bottle of water which half the price compared with most of energy drinks.
(Knowledge@Wharton, 2009).
Continuing with the global economic down turn the reports from a food and drink consultancy
Zenith International, shown 2% increased in 2008 almost double sales figures compared back in
2003, but worryingly in the post five years before 2008 the average increasing was 14% each
year. So this might have signaled the slower demand on what considered as the premium
products like energy drinks. The most best selling continents of energy drinks was also been
badly affected by the global recession. North America is the leading region with approximately
37% global volume, followed by Asia Pacific with 30% and West Europe with 15% and East
Europe with 6% shares. The Asia Pacific was one of the worst experienced the economic affects
and saw the consumption declined falling by 18%. The sales of energy drinks in Thailand were
dropped suddenly by over 40% in 2008 alone, mainly from the number of workers made
redundant during that period. The United States is the largest consumers of energy drinks, flowed
by Thailand, Indonesia, China and UK. Therefore the sudden declining sales from these regions
or countries would negatively pivotal for any energy drinks sale performances (FoodBev, 2009).
Red bull has announced a drop in revenues for 2009 which due to the global economic
slowdown. For the year the company's net sales came in at EUR3.27bn, down 1.5% on the
previous 12 months. Business monitor international agreed the decline sales might well be the
affected from the economic situation but in fact Red Bull was also likely to have been hit by an
increase in competition. Back then in 1997 the first Red Bull entered the US market and one of
the first energy brand single handed worldwide had controlled over 70% of the worldwide
energy drink market. However due to Red Bull main competitors from Monster, Relentless etc
which contained exactly the same ingredients, aimed at the same consumer targets and produced
the well known beverage giants, yet can be up to 50% cheaper than Red Bull. The worried that
those competitors have the abilities to produce the drinks of such a lower production costs. CocaCola and PepsiCo had hundreds distribution centre between them, the ability to achieve the low
production cost per can/bottle have phenomenally threaten Red Bull of its sky high retail prices
(Business Monitor International, 2010).
32
What else with the text book theories of breaking through the success in energy drinks market
apart from having the clear massages, image of the brands that should be pure and simple and the
most important of all, ‘aspiration marketing’ (Knowledge@Wharton, 2009). Red Bull have
certainly achieved in that respect with it success in positioning is brand image, the marketing
strategies; however these activities came as the costs. Via continuing its brands awareness for the
worldwide consumers meant the mass amounts of investments was required. In order to achieve
those brand awareness across the globe, in the past five years, Red Bull had insanely bought out
numbers of motor-sport teams, football teams, sponsors extreme sports, etc (BBC Secrets of the
Superbrands, 2011). Yet these strategies had soon followed by Monster, Relentless as they were
followed the way to success and their virtually unlimited funds on promoting their brands. With
this real case scenarios, the threaten powers from number of competitors, BMI (Business
Monitor International) raised the possible long-term affect that will created the further declining
in sales to Red Bull.
Other threats from if Red Bull keeping decline in its sale performance needed to be also
considered. During the fast emerging competitors to the business sector, the markets shares were
mostly reduced. The existing organizations or companies should analyst it abilities and
performances. The weak performances the trend of declining sales, therefore the suppliers and
the retailers will turn their contacts, licenses, etc to enhance the competitors that have more
potential to be long-term success (Palmer, 2009), not to mentioned the direct competitors from
Supermarket themselves.
One of the solutions to increasing financial performance in beverage sector is to create the
diverse or innovative products, Monster, Rockstar and Relentless have been well succeed in
expanding their products line. One of the success innovative energy drink product such as
‘energy shot’ from Red Bull was proven success, so success in fact that over 70 energy drink
brands have adopt this concept to their product lines (Nutrition Business Journal, 2009).
Meanwhile some studies found the difficult possibility of introducing the alternative or
innovation products to create niche sector in energy drink sector. JuicePoP had tried to launch its
innovative energy drink product, by the combination of fruit juices and sparkling water based on
the new technology that allows using juice without preservatives. The research showed the near
impossible chance to be success in this increasingly crowded market and there are many
entrepreneurs who had the positive determination of their energy drink products, yet little
understanding on the fundamental the marketing strategies to establish a new success energy
drink (Knowledge@Wharton, 2009).
33
VI.
Research Methodology
This chapter outlines the primary research objectives of the dissertation and how it is aimed to
satisfy the dissertation objective. The outline of this chapter closely matches the stages outlined
in Kotler and Keller (2006) research model process. The chapter begins with a short discussion
of the research process, followed by brief outline of the data sources and data collection methods
available to the project. The aim of this chapter is to explain the main research decisions in
collecting information to satisfy the set research objectives.
The objective of this dissertation on the overall energy drinks market and how to strengthen Red
Bull on its future performance furthermore the potential future market for Red Bull in other area
apart from energy drinks market. To finding supported evidences, methodology will help to
underpin as well as to clarify this research to analysis in depth on energy drinks market.
Research Design
According to Aaker (1998), Kumar (1998) and Day (1998), the research design is the detailed
blueprint used to guide a research study towards its objectives. The research design incorporates
the key elements of the research process, including the establishment of research objectives, the
analysis of available data sources and suitable data collection procedures. Furthermore the
research design includes information on sampling issues, data processing, and data analysis. The
methodology will be illustrated by using sufficient research strategies to reach the research aims
and objectives.
This section justifies the choice of a descriptive research design for the stage-two quantitative
research, which is the major phase of this study. A research design is a plan of the research
project to investigate and obtain answers to research questions (Cooper & Schindler 2001; Davis
& Cosenza 1988). There are 5 types of research designs identified from the literature:
Experimental, Cross-sectional, Longitudinal, Case study and Comparative designs (Bryman,
2004).
This dissertation focused on Cross-sectional design, known as a survey design. Survey research
comprises a cross-sectional design in relation to which data are collected mainly by
questionnaire or by structured interview on more than one case and at a single point in time in
order to collect a body of quantitative or quantifiable data. The cross-sectional research makes a
great deal of use of research instruments, such as self-completion questionnaires and structured
observation schedules.
Data collection Methods
Kinnear and Taylor (2007) recognise this stage of the research process to be the point where the
design of the formal project is established and appropriate sources of data for the study
34
identified. In considering this task, the dissertation will firstly, discuss the different sources of
data available for research and secondly, outline the different types of data available to the
dissertation, before finally establishing the initial design of the research project.
In order to meet the information needs of research objectives, the researcher can gather
secondary data, primary data, or both (Saunders et al, 2009). Secondary data provide a good
starting point for research and often help to define problems and research objectives. In most
cases, however, secondary sources cannot provide all the needed information therefore the
researcher must also collect primary data. According to Joseph Gibaldi (2003) said that “Primary
research is the study of a subject through firsthand observation and investigation, such as
analysing a literary or historical text, conducting a survey, or carrying out a laboratory
experiment. Primary sources include statistical data, historical documents, and works of literature
and art”. To achieve the project, the methodology will be divided into 2 parts: primary research
and secondary research. Primary research will provide 2 methodologies which are:
Primary research
This research technique allows us to gather a sufficient of information from respondents in order
to analyse an attitude by using quantitative method. Within the research, online self-administered
survey will be used to collect data because the method is widely used by many researchers as an
appropriate method to collect data from Internet users and reduce costs, time in surveying
(Dillman, 2000; Grossnickle & Raskin 2001; Churchill 1987). Although data from an online
survey may not be as precise as behavioral observation, it is a reliable method for researching
respondents’ attitudes. The key strengths of an online self-administered survey are mainly cost
and accuracy (Aaker, Kumar & Day 1998). Respondents can answer the questionnaire at their
convenience.
Questionnaires
It is a curtail method of collecting a wide range of information from a large number of
respondents. To understand the perception of consumers and consumer behavior which is related
to the scope of this project, questionnaires will be a type of open and close questions and will be
dividing various aspects which are Red Bull brand image, perception of energy drinks, etc. The
questionnaires will be arranged via internet, through e-mail and social networks as well as
engage by consumers in the street.
A survey will also be conducted in UK market. The questions will be printed on papers and will
be aiming on UK/local respondents of every age. The author aims to collect 100 respondents,
from UK.
35
Questionnaire Design
Customers’ responding rate relies more on an attractive layout of the questionnaire (Dillman,
2009). Owing the major issue of postal questionnaires has a low response rate; the design of a
questionnaire would tend to be as simple as possible.
By doing so can encourage interviewees to fill the questionnaires. Thus, the questionnaire is to
be published online (www.monkeysurvey.com) and (Facebook.com) and is therefore trying to
reach more interviewees. The expected number of interviewees is 100 people. This is in order to
obtain an objective and measurable result. The questionnaire will design to examine the
perception of consumers toward luxury brands and consumer’s spending power which can be
divided into two main parts: First part of a question is demographic question (Age, gender,
ethnic, income) about the respondents. To measure variables related to characteristics of
consumers by using checklist. In the second part, is a composed of opened-end questions asking
the respondents to measure their spending behaviors and perceptions.
Sampling
The basic principle of sampling is that it is possible to produce accurate findings without the
need to collect data from each and every member of a survey ‘population’ (Denscombe, 2010).
In sampling method, it has been decided to use Non-Probability sampling which is an easier
method to conduct (Ghauri and Gronhaug, 2002) and Quota control the most common ‘nonrandom’ sampling which involve in various characteristics of the population are considered as
vital for the purpose of the survey contained the questions with ‘gender’, ‘age’, ‘occupation’,
‘income’ and so on (Curwin & Slater, 2008). The author aimed the sampling size of 100
questionnaires, Sue and Ritter (2007) recommend that piloting survey might involve a pre-test
conducted with a small scale of respondent to validity of content and reliability of the question
before distribution. This approach also eliminates unnecessary or inappropriate question that may
cause misunderstanding and confusion.
Secondary research
Secondary data can be collected internally or externally. Kotler (2001) recognise that
‘researchers usually start by gathering secondary data’ to provide a background to subsequent
primary research. For the purpose of the dissertation, secondary sources were collected from a
range of sources. Relevant sources of data for the research project in hand were obtained from
academic journals, textbooks, newspapers, published source, in which arguably the most
important secondary sources this included some data from the official bodies i.e.: The British
Soft Drinks Association, as well as other commercial interested data such as ‘Data monitor’ and
36
other related data was published from ‘Mintel’. And finally from the variety of business
electronic sources which is essential of the collection of networks sharing the exchange and
communication with diverse with non-regulated data (Curwin & Slater, 2008), opinion and
articles listed materials the author chosen the most appropriate internet sources such as the
articles from trusted business website such as BBC news to provide the most accurate possible
and brought to the best analysis secondary research support for this dissertation.
The secondary research will be completed by looking at 3 major sources which are:



Energy drinks business, Drinks marketing and consumer behavior in this sector
Business and marketing journals
Online sources such as e-books, e-journals, business news, business blogs, etc.
The information and data from primary and secondary researches will be applied to analyst into
energy drinks business in details, and the intention to achieve the solid information to implement
and conceivably for those newly entered brands around the globe.
Data Collection
A summary of primary data collection method for the research project is illustrated below:
Method
Data type
Data
procedure
Sample
Quantitative
collection Questionnaires
Sample
of
100
respondents
consisting
both males and females.
One of the key elements of success to the collection of data is the design of the questionnaire. A
questionnaire is a data collection instrument that can be used to measure (1) past behaviour, (2)
attitudes, and (3) respondent characteristics (Kinnear & Taylor, 1983).
37
Data Processing and Data Analysis
In this research, Microsoft Excel statistic program will be used to analyzing and understanding
the data that collected from the questionnaires. The data will be collected through a quantitative
research method, and the ‘Bar chart’ though ‘Microsoft excel statistic programmed’ which will
formulate the data as statistic and numerical term. The statistical data will be consequently
demonstrated and evaluated in form of tables and graphs. The analysis will explain the
relationships between each variable and means.
The challenges and difficulties
One of the market research methods for the primary research was aimed to interview with Re
Bull’s employees. The challenge came before the start of this dissertation. The author had
contact with number of Red Bull offices around the world this include UK, Austria and Thailand.
The aim was to arrange the interview via telephone. As the email had been exchanges from both
parties, the arrangement of the interview time and the availability of the interview proved
impossible. In some case, Red Bull Thailand was totally reluctant even on the email responds.
The questions on the interviews were to investigate into its marketing plan, and other general
business aspect including the future plan of how to sustain its business all of which should have
been very valuable for the author’s research. As Red Bull have strict rules of exposing its
marketing strategy. The respond via email which attached along with their general backgrounds
and some marketing information are shown in appendix 2. However the survey research has been
carried out as normal and should provide with best effort on analyzing other general opinion
from consumers.
Conclusion
It is vital for any research projects should able to undertake the feasible and most appropriate
methodology in order to achieve the best possible information for the foundation resources and
the effective guideline for achieving ‘good research’. This chapter has demonstrated the
methodology of the research project. The consideration has been made to the suitability of
different research methods available to the researcher. The chosen methodology has been
defined and the justification for decisions presented. The next part of the dissertation is to present
the findings of the survey data which allow the better understanding in those consumer’s aspects
and opinions. And finally with the conclusion of the data analysis where some recommendations
will include of what Red Bull should do in the future of its business.
38
IX.
Data analysis
The data from survey questionnaires can be vital information to support the secondary researches
from the earlier stages. The author has gathered the total of 100 questionnaire examples from
various electronic sources such as ‘Monkey Surveys’ and ‘Facebook’. The author aimed to make
this survey as general random through various ages, sexes, and backgrounds as much as possible,
therefore through these questionnaires submission via independent electronic sources would be
the most appropriate for the intention of this survey. The surveys design (please refer to
Appendix 1), is to gather the information from general consumer of their perceptions towards
energy drink, and especially focused on their perception of Red Bull as the energy drink
products.
Sex
70
60
50
40
30
20
10
0
Male
Female
Ethnic
35
30
25
20
15
10
5
0
White
Asian
American
Indin
39
African
Other
Age
40
35
30
25
20
Age
15
10
5
0
15-19 years old
20-29 years old
30-39 years old
40-49 years old
50 yeard old or
above
From the beginning for the survey with generally gathered the information of the interviewees’
backgrounds. The first four question which include sexes, ages, ethnics, and education
backgrounds. Majority of the respondents were males with 58% and females in 42%. The actual
aimed from the question 2 in the ages of the respondents the author got were much satisfy as the
majority of energy drink consumers were among Generation Y. Therefore by have the majority
of respondents in age group of 20-29 years old will provide the realistic feedback from this
important consumer target.
The majority of the respondents were having the education backgrounds ranged from Collage
students to higher education in masters degree or above, which meant ranged from students to
young professionals.
Education
40
35
30
25
20
15
10
5
0
Education
High School
College
Bachelors degree
40
Masters degree or
higher
In the later of the first part of the survey aimed to gather how frequently of the consumption from
respondents. The data shows that majority of respondents have purchase energy drinks most in
‘every week’ followed by ‘everyday’. Only few respondents have never consumed any kind of
energy drink products. In the question that asked on the frequently of the respondents of
purchasing Red Bull prove positively. From question 6 (and later in question 90 have shown the
prospective of purchasing Red Bull majority of every week and everyday despite Red Bull
premium retail prices, which also can indicate the positive consumers awareness of Red Bull in
an energy drink market.
Surprisingly even though the mere 5% of the respondents have consumed energy drinks over
twice a day, which actually over the recommended from health authorities and the energy drink
companies. In dept details those 5% that consumed over twice a day were majority from the
respondents’ age of 15 to 29 years old group. This data will indeed support the theories of the
new ‘culture’ of edgy ad work hard play hard on current trend of partying etc from these
consumer groups.
How often you consume energy drinks?
40
35
30
25
20
15
10
5
0
How often you consume energy
drinks?
Over twice a Twice a day Everyday Every week
day
Every
month
Never
How often you consume 'Red Bull'?
35
30
25
20
15
How often you consume 'Red Bull'?
10
5
0
Over twice Twice a day Everyday Every week
a day
Every
month
41
Never
What is the reason likely for you have Energy drinks
45
40
35
30
25
20
15
What is the reason likely for you have
Energy drinks
10
5
0
What is your preferable Energy drink brands?
35
30
25
20
15
What is your preferable Energy drink
brands?
10
5
0
Red Bull
Monster
Rockstar
Relentless
42
Other
(Supermarket
own brands,
etc)
In part 2 the questions aimed to identify the consumers spending on energy drink products in US
dollars (due to the random environment of surveys). What the most recognize energy drink
brands in respondents’ opinions. And finally aimed to gather data on what consumer trends are
and what they think of the future of Red Bull they prefer to see. From question 7 the average
spending on energy drinks in a weekly basis was around 10-12 US dollars, that roughly approx
of merely once a day.
The data shows that the majority of the reasons behind purchasing energy drinks were mostly
because of ‘general tiredness’ and closely followed by the consumption at ‘social activities, such
as partying etc. There were surprisingly low percentage of the reason of consuming energy
drinks in the traditional period that to enhance the ability before and after the sports activities.
This data have strongly indicated the support theories of consumers’ new perceptions toward
energy drinks today.
From the responding data in question 9, could show that ‘Red Bull’ is still one of the most
recognizable energy drink brands today. The question of why consumers prefer Red Bull energy
drinks were strongly related to Red Bull as an iconic of the energy drinks. There is hardly any
respondents stated the reason of likeable of its taste. However regarding the respondents that
chose other brands such as supermarket own brands were respondents who in average weekly
spending on energy drinks lower than 10 US dollars.
Would you want to Red Bull to produce other
sector of beverage drinks?
90
80
70
60
50
Would you want to Red Bull to
produce other sector of
beverage drinks?
40
30
20
10
0
Yes
No
43
What would you prefer Red Bull to expand its
product into which sector?
70
60
50
40
What would you prefer Red Bull
to expand its product into which
sector?
30
20
10
0
Healthy/Organic
sector
Alcohol related
drinks
Other
In the final part of questionnaires aimed to gather the preferable of the Red Bull products in the
future. Majority of respondents would want to see the expanding of Red Bull product lines. From
respondent opinions indicated the healthy issues are important, over 60% of the respondents
would prefer Red Bull to expand their products in healthier type of energy drinks. However
nearly 30% had totally preferred Rd Bull to expanding its energy drinks which related to alcohol
products, and other 10% would prefer Red Bull to have more diversify energy drinks i.e.: added
flavors, energy drinks for females etc.
From this questionnaire data can conclude that Red Bull is still one of the household brands in
energy drinks market. The demands of energy drinks seemed stable as frequently purchases on
weekly basis. However with various varieties of choices in energy drinks nowadays. The future
of Red Bull would certainly need to diverse its energy drinks products to suits every consumer
groups.
X.
Conclusion and Recommendations
This dissertation aimed to analyst the future of Red Bull. From both secondary and primary
researches shows that the energy drink market is likely to continue to grow and will be worth
billions of dollars in years to come. Red Bull is one of the first to capture the ‘energy drinks’ we
known today. There is no question about the Red Bull success in the past decade. Red Bull is one
of the most recognise brands in energy drink market today. Hundreds of competitors in energy
drink market today, which majority of them have the diverse their energy drink product
portfolios. Among hundreds of competitors, the biggest threats were from the giant beverage
44
rivals, Coca-Cola and PepsiCo that would eager to overtake the leader in energy drink sector
from Red Bull. he advantages of Coca-Cola and PepsiCo are their numbers of distribution
centres which provided them with lower costs of production, in which Red Bull is unable to
compete on its retail prices. Among these two giants alone consists of many energy drinks subbrands which not only are the second and third best selling energy drinks at the moment but also,
having the advantages of their abilities to diverse their energy drink products as they also owned
other fizzy drinks.
Worryingly the success story of Rd Bull was always because of its marketing strategy, which
successfully captured its consumer target group. However Red Bull heavily relied on its
expensive marketing campaigns alone. The costs of keeping Red Bull brand seen worldwide took
away 25% of Red Bull sales revenues alone. And unfortunately these marketing strategies were
easily duplicated by those giant competitors, as Monster, Relentless and Rockstar were basically
copying Red Bull marketing plans as their availability of funding. In additional to these giant
competitors, Red Bull also had the direct competitors from its retailers. The supermarket which
have now create their own energy drinks, having their own shelf spaces, able them to sold their
products at much lower prices, Red Bull was facing all rounded competitors from every
environments. So what Red Bull should do in the future to keep its status in energy drink market
sustainable in the long-term?
The statement from Mateschitz the co-founder of Red Bull in 2004 realised these threats of
losing battle with its rivals. He stated that Red Bull have to go for diversification and possibly
even acquisitions. He also stated that Red Bull had now heavily invested in R&D for the stability
of Red Bull brand in the next five years. Yet now after 7 years of his statement, Red Bull
products barely diversify, since then only the ‘energy shot’ was create as its new line of products.
It certainly not easy tasks of successfully of expanding or introducing new products to the
market, in 2004 Red Bull introduced its caffeine bottling water called ‘LunAqua’ in the fullmoon parties, was the only product that carried Red Bull logo apart from its main energy drink
products, yet failed to excepted from consumers (London Business School, 2005).
Recommendations
For Red Bull to be sustainable in the long term future, it is necessary For Red Bull to expand its
product lines, to capture various energy drinks market shares. It is certainly feasible for Red Bull
to expanding its related products as the brand ‘Red Bull’ is already and iconic and well
established to worldwide market. The ability of Red Bull to consider ‘brand extension’ is one of
the positive ways forward for Red Bull. Due to Red Bull in the past decade had heavily invested
brand promoted/awareness already, as well as its positive feedbacks of Red Bull brand among
consumers. Therefore rather than started all over again with the ‘new name’ was unnecessary
(Palmer, 2009). However as the Red Bull brand was attached with the images of edgy and
45
innovative, to extend their non-related products can also damage the existing brand images at the
same time.
However there is no denying the difficulties to be success introducing the new products to the
market or create a niche market segment. It is important for any companies to ‘evaluate its
market segment’, companies should carefully choose the market segment that worth to invest,
and always weight out the attractiveness opportunity in consideration with their capabilities. As
well as knowing the size of the market, every company should be sufficient size that they can
serve or deliver the products/services economically, for example selling the low-cost holiday
packages ‘only to the popular destination’ able to operate economically within 100,000s
customers, but in contrast with high-end holiday packages which would more feasible to operate
with the thousands of customers scales which suits their demand.
In order to expanding product line the energy drink market which already over crowned,
however the high potential of profitability segment, attracted more and more competitors,
therefore Red Bull need to considered the related products expansion. The report from F1 times,
shown the close relationship between Red Bull and its new sponsor of Red Bull F1 team ‘Singha
beer’, both companies have started from Thailand and their both founders were among the best
relationship of each companies (F1 times, 2011). Yet the author sees this opportunity of coordinate from both companies to create the innovative beverage products in the future, but
however the criticisms of the energy drinks and alcohol beverage products would not be the best
solution of Red Bull’s future. From the negatives reports in secondary research as well as the
questionnaire feedbacks which indicated the way forward of Red Bull have to be with the health
concerns.
The diversify products from Red Bull also important to fit with the company objectives, to
maintain the premium images/values of the brand and also need to meet the core competency of
Red Bull brand. For example of BMW to expand its brand to cheaper version of sub-brands will
not suited the brand’s competency of ‘luxury’ vehicles. And it is pivotal for any company to spot
the right demand of the potential profitable market that fit to the company objectives. But
however some success example from ‘Amstrad’ which launched according to the demand of
low-cost household electronic items and boom demand of low-cost desktop computers, have led
Amstrad to the great success of spotted the demand opportunities which applied to its strengths
and core competencies. And similar case studies from ‘Easyjet airline’ take on the demand of
low-cost air travel and ‘Carphone warehouse’ on the spotting the increase demand of private
owned mobiles phones (Palmer, 2009).
Other options for Red Bull to expand its product lines are via merging or alliances with other
beverage companies. Although this option may have the disadvantage of risk of helping nuture
competitors, such as the case example of Rolls Royce and GE had outrun each other by only
46
leant tricks and gain core values from each other rather than resolve problem issues and enhance
both companies’ goals. But for Red Bull to choose the equity-based alliances which both Red
Bull and its partners invest one another to reducing risk of financial issues, improve poor
performance, sharing resources and expertises and enhance the speed of delivery new products to
the market (J. G, Frynas & K, Mellahi, 2010). Many successful examples via alliance to one
another such as ‘Star alliance’ which were formed by numbers of airline to reducing costs, i.e.:
able them to share R&D costs, sharing information and benefits each other via reducing the
problematic situations of flight delaying and transferring of airline passengers (Pang, 2009).
In conclusion, Red Bull which already well-established energy drink brand, yet now still the
leader in energy drink market for over a decade. The attractiveness of this highly profitable
market can also become non-attractive. The advantage of Red Bull that well-recognized by
worldwide consumers needed to be enhancing by creative products from Red Bull, after all that
was one of the core competencies’ images of Red Bull. The threats from its competitors’
advantages of having lower cost of productions and the abilities to diversify product lines cannot
be overlooked. Although there are the risks for Red Bull to expanding its product lines, the
possibilities to damage its brand image, by giving away its core values etc. But the risk of not
expanding is far greater than not attempting. The evidences of the gaining of its competitors’ sale
performance caused Red Bull on declining in its sales. For Red Bull to keep the leading position
in energy drink market is not easy, clearly there are many opportunities and many business
strategies needed to adapt to compete with its competitors, but with the correct and careful
business plans and its long experiences in this market sector, Red Bull will surely should be able
to continue its success story for decades to come.
47
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51
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List of figures
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Figure 1.0 Lipovitan D ingredients example
http://www.taisho.co.jp/en/company/release/2004/04_0614-e.htm
Figure 1.1 Go-Girl energy drinks
https://beautifulenergy.wordpress.com/tag/go-girl-energy-drink/
Figure 1.2 Diabolo Loco fruity energy drinks
http://www.drinkdiabolo.com/
Figure 1.3 Teenage consumers
http://www.youthnoise.com/user/tollieschmidt/blog/view/14943
Figure 1.4 Energy drinks-the market shares in 2005
http://researchwikis.com/Energy_Drinks_Market
Figure 2.0 Original Red Bull in Thailand
http://www.slxs.co.za/2011/04/10/krating-daeng-the-original-red-bull/
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Figure 3.0 Red Bull’s main products
http://www.thebeverageworks.com/red-bull-products-new-york-jersey.php
Figure 3.1 Red Bull Energy shot
http://www.highsnobiety.com/news/2009/01/17/red-bull-introduces-energy-shots/
Figure 3.2 Red Bull marketing strategy
54
http://www.insurance-matters.net/news/03/show-yourservice247/attachment/redbull_mini_vinyl_car_wraps_jpeg-2/
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Figure 3.3 Red Bull formula 1 team
http://iphonetunes.net/index.php/full_article/comments/artificial_life_signs_f1_red_bull_
racing_and_gives_f1_bmw_goodies_from_the_/
Figure 3.4 Red Bull Air Race
http://www.countryandfolk.com/2008/08/fantastic-invitation-red-bull-air-race.html
Figure 3.5 Red Bull Extreme sports
http://gizmodo.com/5644779/when-extreme-sports-meets-awesome-projected-art
Figure 3.6 Red Bull Salzburg Football Club
http://www.redbull.com/cs/Satellite/en_INT/Article/Aiming-for-a-double021242789471583
Figure 4.0 Top 15 Energy drinks in 2007
http://www.energyfiend.com/the-15-top-energy-drink-brands
Figure 4.1 Monster Energy drinks
http://mw2monsterarmy.webs.com/apps/photos/photo?photoid=78568426
Figure 4.2 Monster energy drinks’ Motorsports sponsors
http://motorsportsnewswire.wordpress.com/tag/monster-energy-drink/
Figure 4.3 Relentless energy drinks
http://swiftor.com/f15/favorite-energy-drink-955/
Figure 4.4 Relentless energy drinks extreme sports sponsor
http://lillylovelett.com/blog/2011/06/10/nass-festival/
Figure 4.5 Relentless music festival
http://www.gigwise.com/festivals/55494/Relentless-NASS-Festival
Figure 4.6 Rockstar energy drinks
http://www.rockstar69.com/
Figure 4.7 Rockstar’s sports and games sponsors
http://www.speedjunkie.ca/forum/viewtopic.php?f=14&t=14257
Figure 4.8 ‘Go-Girl’ female consumers
http://www.gogirlenergy.com/?navid=15
Figure 4.9 Tesco’s energy drink (KX) and Asda’s energy drinks (Blue Charge)
http://energypirates.blogspot.com/2010_05_01_archive.html
55
Appendices
Appendix 1: Questionnaire
Part 1: Please tick the option that you find most suitable:
1. What is your gender?
 Male
 Female
2. What is your ethnic?





White
Asian
African
American Indian
Other
3. What is your age?
 15-19 years old
 20-29 years old
 30-39 years old
 40-49 years old
 50 years old and above
4. What is your highest level of education?
 High School
 College
 Bachelors degree
 Masters degree or higher
5. How often you consume energy drinks?
56
 Over Twice a day
 Twice a day
 Everyday
 Every week
 Every month
 Never
6. How often you consume ‘Red Bull’?
 Over Twice a day
 Twice a day
 Everyday
 Every week
 Every month
 Never
Part 2: The following section will just ask you about your purchasing behavior.
Please answer question in US Dollar and select one answer most suitable.
7. How much you spend on Energy drinks on the weekly/monthly basis?
$_______________
8. What is the reason likely for you have Energy drinks?
 General tiredness
 After/Before sport activities
 The likeable taste of products
 Social activities (Nightclubbing etc)
 Other (Please state the reason)
_______________________________________________________________
57
9. What is your preferable Energy drink brand?
 Red Bull (Please refer to question 10)
 Monster
 Rockstar
 Relentless
 Other (Supermarket own brands, etc.)
_______________________________________________________________
10. Why you prefer Red Bull?
_______________________________________________________________
11. Would you want to Red Bull to produce other sector of beverage drinks?
 Yes (Please refer to question 12)
 No
12. What would you prefer Red Bull to expand its product into which sector?
 Healthy/Organic sector
 Alcohol related drinks
 Other (Please state what)
________________________________________________________________
58
Appendix 2: Red Bull SWOT analysis (Datamonitor 2004)

Strengths
Market leadership
Within the energy drinks market Red Bull is the industry leader throughout the world. It has
annual sales of a billion cans, with a significant presence in Europe and the US. In 2003 it
achieved an 80% brand share of the UK energy drinks market. In Europe the company produces
two-thirds of overall volume in the region. The brand is present in 13 West European countries
and holds the lead in 12 of these. The rest of the top 20 brands take a combined 17% share. In
terms of market trends, fewer new brands are being launched compared with the 1990s, and there
has been a clear shakeout since 2000. Even the products offered by leading drinks manufacturers
are failing to make major headway against Red Bull, with products such as Coca-Cola’s Burn
absent from the top five.
Marketing efforts
The heavyweight promotion and expansion of the Red Bull brand, which brought the concept of
stimulation drinks to the western market, has driven functional drinks growth over the years. The
company employs well targeted marketing campaigns that appeal to the core 18-25 age group. It
has promoted its product using its ’Red Bull gives you wings’ slogan and sponsoring Formula 1
driving; free skiing; BMX biking and other dangerous sports. This has significantly increased
consumer brand awareness of the product, and differentiated it from its competitors.
Cadbury Schweppes alliance
Red Bull has established an alliance with Cadbury Schweppes in Australia. The alliance has
helped expand the brand’s marketing distribution, allowing more customers to have access to
Red Bull across the nation. Sales, which are already 40% up compared to the same time last year,
are set to rise dramatically as a result of the pending partnership. Red Bull believes Cadbury
Schweppes can help it reach new channels such as food courts, vending machines, hospitals,
colleges and sports and travel facilities, ensuring an increased customer base. Such partnerships
allow the company to reduce competitive threats from its rivals and extend its sales
opportunities.

Weaknesses
Lack of innovation
A number of new energy drinks have been launched in 2004. Raw Energy Fuel Cell is a
Canadian vitamin and glucose drink, which is endorsed by World Wrestling Entertainment. This
product contains no taurine and has less caffeine than rival offerings. It also comes in 330ml PET
bottles as opposed to Red Bull’s 250ml cans.
59
Other firms are also making headway in the market by introducing sports drink packaging and
other initiatives. With little change in its product format, Red Bull is being left behind from the
majority of its competitors.
Reliant on small product base
The company only markets one branded product, Red Bull Energy Drink (along with a sugarfree
variety). It is therefore vulnerable to market fluctuations, especially as the energy and sports
drink category in which it operates is the smallest sector of the overall soft drinks market. With
consumer interest turning away from Red Bull’s major strength of carbonates towards healthier
alternatives, the firm is finding itself as less of a giant in the playing field. The company would
therefore benefit from introducing drinks into other, more successful drinks categories.
Marketing expense
Extensive marketing efforts are required for Red Bull to boost product sales. The energy drinks
have high association with fashion and youth trends, and the company must project itself as in
line with this in the face of giant rivals such as PepsiCo.
Despite the massive costs Red Bull’s marketing campaigns, its rivals also investing huge
amounts, resulting in Red Bull gaining smaller returns from these investments.

Opportunities
Diversification of retail outlets
Red Bull has recently detailed an initiative to use vending as a new route to increase sales.
Vending is increasingly acting as an important advertising vehicle and the company is exploiting
this avenue in order to stimulate growth. The manufacturers of Coca-Cola and Pepsi have long
used this route, and firms such as GlaxoSmithKline and Outspan have also entered the market.
Red Bull’s decision to introduce vending illustrates its commitment to diversify its distribution
network and keep up with industry trends.
Extension of product line
New entrants into the market are unlikely, as extensive marketing and promotion are required to
retain market share, needing large financial resources. Datamonitor expects the most successful
new product in the market is likely to be an extension of an existing brand, and will succeed best
in the non-cola carbonates sector of the market. Marketing products as functional drinks the
company may be able to extend its product line, capitalizing on strong consumer awareness of its
brand.
Geographical expansion
60
With sales derived from 100 countries, Red Bull has an extensive geographical reach. The
company is building upon this by making inroads into developing markets such as India. With a
distribution deal secured with Mount Shivalik and Narang Hospitality Services, these firms will
market distribute and manage the logistics of the drink. Red Bull will initially be promoted in
North, East and Central India, with a view of rolling out the product to further regions in the
long-term. The Asia Pacific region holds a good opportunity for growth for Red bull as in 2003 it
accounted for 50.9% of the global market share of the Functional drinks market (40% of which is
energy drinks). The market is also predicted to grow at CAGR 5.2% in the next five years
reaching a market value of around $16.1 billion by 2008.

Treats
Public health concerns
Red Bull’s energy drink has been banned in France due to concerns over its high caffeine
content. Experts fear that the drink could be potentially deadly when combined with alcohol or
when drunk after strenuous exercise. The move has been backed by the EU’s high court,
asserting that the drink is a real risk to public health if consumed in excess. Denmark is the only
other country to ban Red Bull, although authorities in Ireland, Turkey and the US have expressed
concerns about it. The drink is classified as a medicine in Norway and until recent years was
only available in pharmacies in Japan. These issues are creating significant adverse press for the
company.
Maturing market
The energy drinks market has witnessed slowing growth in recent years. In 2003, the US
carbonated soft drink industry posted volume growth of only +0.6% overall. That growth rate
represents a slight decrease from the 2002 growth rate of +0.8%. It is far below the industry’s
annual 2%-4% growth rate range seen throughout most of the 1990s. This slowdown in growth
may inhibit the company’s revenue expansion potential going forward.
Consumer awareness of health and well being
Drinks retailers are becoming increasingly aware of the potential growth in bottled water sales.
Per capita consumption of bottled water has now risen to 35 liters, in comparison to one liter 20
years ago. Consumers are becoming increasingly aware of their health, and bottled water is
associated with health and well being. Although Red Bull has recently launched Red Bull
Sugarfree, the drink’s high caffeine content may remain a concern for the health conscious.
61
62