Comment - Soft Drinks & Water - Red Bull Still Stimulates, 30 Years On
It was 30 years ago today... Well, kind of.
One normally celebrates the birth, not the conception. But, it is 30 years since the Red Bull concept first started taking shape. Following the announcement late last month that the company is to build a new plant in Brazil, Richard Corbett investigates the secrets behind Red Bull's success.
Back in 1982, when a toothpaste salesman was checking into his hotel in Bangkok feeling a little bit groggy after a long flight, I doubt the person who suggested he try the local pick-me-up, ‘Krating Daeng’, would know what it would lead to. The seed for Red Bull, the modern day beverage equivalent of the Beatles, had been sown. Thirty years on, and the company has announced that it has been granted permission to build a new all-singing, all-dancing soft drinks plant in Manaus in Brazil. It would appear that another chapter of this success story is about to begin.
Dietrich Mateschitz must have been quite good at marketing toothpaste, because he was, reportedly, able to raise US$500,000 from his savings and go into partnership with Krating Daeng’s owner, Chaleo Yoovidhya, to develop a stimulant more suited to the Western palate. It still must have felt like a considerable gamble but, after Red Bull launched in his native Austria in 1987, he'll have been reassured by the enthusiastic response. In the years since, the brand has prospered in virtually every market it has launched into.
I recall when I first encountered Red Bull, as a student in the mid-nineties, when it first exploded onto the scene in the UK. We drank it in the nightclubs with vodka and, in the mornings, used it to gear us up for our lectures. It was also a perfect accompaniment to late night revision, and more refreshing than ProPlus. Today, as a more sober family man, I still drink it on long journeys just like the lorry drivers and rickshaw drivers still do.
The concept of a drink that provides liquid alertness seems so obvious. But, it is one thing having the right product; it's another to make people want it. Mateschitz’s marketing skills have been an important factor in realising that success - it wasn’t Mr. Pemberton, the inventor of the product, that made the money out of Coca-Cola. Red Bull’s involvement with extreme sports, as well as the more conventional Formula One, has been positioned to keep the brand in favour with its younger core audience while keeping it visible to older consumers on a global stage. The teenage audience in particular has been targeted by newer energy drink alternatives like Monster or Rockstar. Red Bull is also recognised as one of the pioneers of viral marketing exploiting the new mediums that have developed on the back of the internet.
Of course, it has not all been plain sailing. Often ferocious - and unproven - health debates have often broken out and, at one point, bans were in place in Denmark, Norway and France. In Sweden, some chains even introduced age restrictions on the purchase of energy drinks as a whole following the arrival of energy shots. Meanwhile Red Bull Cola in Germany was found to have traces of cocaine in it, which prompted a high profile ban in some parts of the country. Over the years, the controversy has almost become part of the brand’s identity. Certainly, when Denmark, Norway and France lifted their restrictions, demand proved to be like a coiled spring and sales rocketed.
There is little controversy in Brazil, though, and Red Bull already lays claim to around half of the country's energy drinks market. It’s a good market to be in too; according to beverage research agency Canadean, last year, energy drinks sales are predicted to have jumped by 21% in Brazil. Once again, marketing has played its role: Brazilians love their football and Formula One, and Red Bull’s involvement in both sports has contributed to its sucess. The choice of building their first fully-owned facility in Brazil, then, seems to be quite a straightforward one. Not only is demand per capita for energy drinks set to double in the next five or six years in Brazil, but the country will be a gateway to the rest of Latin America. It is also a market that will be the focus of many of the global beverage big guns in the future. It is another reminder that Red Bull now sits at the top table.
Importantly, local production will enable Red Bull to be more competitive on price, a considerable barrier to Red Bull being more mainstream in this part of the world. In Brazil last year, there were around 30 regional bottlers producing lower priced energy drinks. Even in the more affluent West European markets, where the Red Bull brand cut its teeth, price was a considerable handicap. Although the brand could consistently fend off most of the 'me-too' brands that sprung up in many countries, considerable share was conceded to private label and B brands in the supermarkets.
Being competitive on price in Latin America will be an important factor in facilitating the development of the brand. It will also ensure that the Red Bull story carries on for another 30 years.
With shoppers more price-conscious than ever, drinks producers need to be be on top of their game when it comes to how they promote their brands, says Rod Street, executive VP of international consult...
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