Red Bull prepares to defend market share as V takes up the challenge
Red Bull's domination of the global energy drink market is under threat from Australasian upstart Frucor.
Frucor makes V and has 60% of the growing Australasian market. It has launched into the UK and South Africa and plans to expand overseas taking on Red Bull's worldwide dominance. Its first target is to become the number two energy brand, behind Red Bull, in the £300m UK market.
But Red Bull is fighting back by taking on V in its domestic markets of Australia and New Zealand. The two companies have already clashed over V's marketing and the use of the phrase "vitalises body and mind" which Red Bull claims as its own.
Red Bull is protesting the use of the slogan and has already won in South Africa where the Advertising Standards Authority ruled V could not use it.
"Red Bull has been using the line "vitalizes body and mind" in its advertising and on its cans since 1987 when the product was first launched in Austria," said Red Bull corporate projects manager Paul Devereux.
"It was then launched in English in the UK in 1993 and we have been using the slogan since we arrived in New Zealand in 1996 - long before V was even thought of. The slogan is a key element of our global positioning.
"Consequently, we have applied to register the slogan as a trade mark in both New Zealand and Australia and, following the South African ruling, we are confident of success."
While Red Bull has had a limited presence in Australasian markets it has only been in recent months that the brand has received a big push - and this has prompted the "vitalize" challenge.
While Red Bull has languished, Frucor has turned V into the market leader and it is almost solely responsible for the growth of the energy drink market in Australia and New Zealand. The market was worth just NZ$2m in New Zealand in 1997 when V was launched but it has since grown to $72m a year.
Australia is a less developed market but both companies see big growth opportunities. Energy drink consumption in Australia is about half a litre per capita compared with 2.3 litres in New Zealand. Both companies are vying to be the big winner as the Australian market expands.
Frucor is challenging the Red Bull "vitalize" complaint and is considering appealing the South African decision. "We have been using this phrase for three years and they have only just come out and said they think that it is wrong. The fact we have been using it for three years proves that there has been no issue up to this point so why should there be one now?" Frucor chairman Simon Pullar told just-drinks.com.
"Also the phrase is reasonably generic to the sector. There are lots of people using variations of the vitalize theme. Red Bull is also trying to lay claim to a generic word. They are taking a word from the English language and saying 'that is ours'."
But Red Bull crashing V's Australasian party doesn't worry Pullar.
"I think any good company says competition is a good thing as it is 'vitalizing'. Red Bull is a very strong company and they have done a fabulous job worldwide.
"But I think our products are complimentary and usage is different. They will be a force in the Australian market but our share is staying solid. It is the smaller brands that are getting squeezed as the market is consolidating towards two strong brands."
Frucor was formed when the New Zealand Apple and Pear Board was privatised. It floated half the company for $940m in June but analysts had been disappointed that the starting share price of $1.50 was well below estimates of $1.95 to $2.25. But since the floatation the share price has rocketed and is now above the $2.25 mark.
The company will reveal its results for the financial year ending June 30 next week. Forecasts predict that operating revenue will be up 64% to $184m and profit will be 166% higher at $13.3m.
Companies: Red Bull
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