The biggest market player in the energy drink segment, “Red Bull” sold a whopping 7.5 billion cans sold in the year 2019 that is equal to 1 can for almost every person on the planet. But Red Bull is much more than just an energy drink brand. As of 2020, Red Bull officially owns 2 Formula one teams, 5 Football Clubs and 1 Ice hockey team amongst the others and along with this Red Bull also sponsors thousands of athletes from different sports around the world. So it is quite clear that Red Bull does much more than just selling an energy drink.
It was the summer of 1982 when the Austrian businessman Dietrich Mateschitz found himself with a jet lag during his business trip to Thailand. He tried a local energy drink named Krating Daeng which was believed to reduce jet lag substantially. Krating Daeng can be translated to Red Gaur. Gaur meaning a bull in South-East Asia and thus the name “Red Bull”. Inspired by this Krating Daeng, Mateschitz planned to bring this product to Austria under a new product category, The Energy Drink. He presented this idea to a number of investors but they didn’t see a market for this outside of Asia. Even he knew there was no market for energy drink but instead of giving up, he decided to create one himself. He was very sure that this drink will make him a fortune and so he co-created this drink with Chaleo Yoovidhya who was the boss of Krating Daeng manufacturer.
They modified the ingredients to suit the tastes of Westerners, and launched the product in Austrian markets in 1987. This drink was initially banned in Germany and this made the Red Bull an outlaw brand and Germany and they got a huge profit from it. The Germans used to cross the border to buy this energy drink and thus Red Bull sold over a million can in its very first year. Red Bull entered the US market in 1997 and it was selling over a million cans per day.
The Strategic move of Red Bull:
Red Bull is a brand well known for its marketing strategy. But it was more than just the advertising and the extreme sports that contributed to the brand image. Red Bull used a very unique blend of marketing and selling their products while it outsourced the production and the logistics part to a different company, in short the production is handled by a different company while Red Bull completely focuses on selling the drink. The Red Bull’s key to success is their ever loyal customer. Although Red Bull is costlier than some of its competitors, Red Bull customers associate the energy drink with quality, and they are willing to carry a higher price for it.
The history of Red Bull’s marketing strategy:
When Red Bull was first introduced, there was no market for the energy drink. To create a new market, Mateschitz focused on their target audience (18 -35-year-old males) at college parties, libraries, coffee shops, bars and other places where they hang out. By bringing their audience free samples, they put the product right in their consumer's hands. That got their audience talking, spreading the word about their product for free. They did it by employing the Students Brand Managers. The student brand managers were popular university students encouraged to promote the drink in university campuses and parties to different locations. Even today, they employ a similar strategy: they go wherever their audience is at. Whether that means sponsoring a music festival or creating top-notch culture content, they'll do it. In fact, the content Red Bull publishes is executed at the same level as a professional publishing house. They're effectively a media company that happens to sell an energy drink, rather than the other way around. But this is just a small part of Red Bull’s marketing.
By sponsoring and owning a number of Sports team across various sports and around the world, Red Bull engages with their target audience in a deeper way than the traditional advertising could ever do. Thus making the customers feels active and excited by drinking from the can that has a same logo as a Formula 1 car.
What makes Red Bull different from its competitors?
Red Bull employs a very unique marketing strategy. Their strategy is always based on portraying the “extremes”. With the extreme brand of marketing, they have a very particular target audience, people who like to participate in extreme sports and adrenaline junkies.
The working of Red Bull’s strategy is mainly based on these 3 reasons:
1. Story performing: It is said that the most important part of marketing is the ability to tell stories. Red Bull took it to next level by performing the stories. They don’t look for stories to be associated with but instead create their own stories which entice their target audience. The ultimate example of the story performing was Felix Baumgartner jumping from space in 2012. The project coasted Red Bull around $50 Million but it was estimated that the global reporting of this event got them a whopping $6 Billion.
2. Content is the king: Red Bull prioritizes the content rather than the product. They give their audience the best content through extreme sporting events, sponsoring music concerts and etc. They also give complete freedom to their creators to showcase their talent and keep the product secondary. This gives people the stage they deserve and thus increasing the reach of Red Bull to every corner of the world.
3. Consistent Branding: Even today Red Bull can be seen using the strategy they first used that is targeting the college students and night clubs. The new campaign or content they create can be related back to their past and this gives “Red Bull the wings to fly”.
Future of red Bull:
In 2019, Red Bull sold 7.5 Billion cans which got them a revenue of over $6 Billion and out of this about 1/3rd was used on Marketing. Although Red Bull dominates the energy drink market, its revenues growth has been on a downwards trend since 2012. The company totally depends on 1 product only, the energy drink. This limits the brands growth and is quite a big risk for the brand. This is especially due to the growing awareness on health and nutrition, the focus on a product that causes obesity, insomnia and diabetes may back fire in the coming future.
The investment in the sports teams and different events are not only for marketing but to diversify the brand in different sectors creating additional revenue chains next to the energy drink business. The Red Bull’s New York football team is a perfect example of how sports is creating revenue for the brand. They purchased the team at an estimated price of $25 Million in 2006 and according to Fox the team is now worth $290 Million. Red Bull was able to grow their revenue by almost 10%.
Still the major revenue driver for Red Bull is the energy drink which accounts for 97% of the total revenue of the brand while the brand is still trying to diversify its profile.