Red Bull

all the rage

by Abram D. Sauer
November 19, 2001

Corporate legend has it that back in the early 1980s, while traveling to
Asia on business, Austrian Dietrich Mateschitz came across some very
popular "energy drinks. With his (self-described) "uncanny instinct for
successful product innovations, he schlepped a small sample of energy
beverages back to Europe along with a "big idea. Then, with a "clear
vision and a lot of scientific know-how Dietrich (and what was surely
several unnamed food scientists) gave birth to the Red Bull Energy
Drink.
n 1997, Red Bull sold one million cans helped no doubt by its
introduction to US consumers after a decade on European shelves. n
1998, Red Bull


sales mutated to over 300 million cans and last year in what at first
appears to be some kind of bookkeeping typo Red Bull reported
worldwide sales of US$ 1 billion (1.13B euros).
Red Bull's logo two thick-necked Herculean crimson bulls in opposing
charge against a yellow sun is the epitome of the kinetic virility and
pugnacity the beverage claims to provide. ndisputably, the dominant
energy-drink brand, Red Bull has chosen to stick with its one product
beverage line, avoiding branching out into similar areas such as energy
bars or other sports-related products. n addition to conventional
advertising (TV, radio), the company also maintains its liquid-adrenaline
image by sponsoring 138 athletes in such X-Game disciplines as BMX,
motocross, hang-gliding, skateboarding, wakeboarding and bungee
jumping.
Away from athletics, Red Bull has also made sponsorship forays into the
rave scene, where it is the dominant brand in the market for what are
known as well drinks. The Red Bull Music Academy, which features some
50 DJs workshopping twice fortnightly in subjects such as "turntablism,
was first held in Berlin in 1998, then moved to Dublin, and was scheduled
for New York in 2001. Despite a handful of competitors in the energy drink
market, Red Bull has proven to be the only brand capable of such an
international crossover appeal, having planted itself firmly throughout
Europe, the United States and a good deal of East and South East Asia.
n Thailand, a T-shirt featuring the Red Bull logo is /e rigueur for one's
travel uniform.
The trouble in paradise for Red Bull is that the brand exists in a world of
smoke and mirrors, rumors and urban legends. For beginners, the
prescribed use of the beverage (energy booster) is only ceremoniously
winked at, while the infinitely more popular use (alcoholic mixer) is quietly
promoted behind closed doors. ndeed, it was the discovery by dance hall
devotees in Europe that Red Bull, with its high caffeine content, is the
perfect agent to mix with vodka for the antidote to early morning party
exhaustion. t was also under such patronage that Red Bull made it to,
and began dominating, the US market. While Red Bull claims to not
promote the use of its product as a mixer, it does sponsor contests and
prizes for bartenders and waitresses.
Due to its growing association with alcohol and partying, Red Bull has
acquired the reputation as an over-the-counter liquid narcotic. While this
association produces sales, it also draws the attention of those who make
a mission of lambasting such mind-altering substances. Officials in both
reland and the US have, on occasion, banned energy drinks including
Red Bull by name following several accidents in which energy drinks
were suspected. However, the more Red Bull is associated with danger,
the more its popularity grows, as if kids say to themselves, "Hey, look, this
stuff is the real deal.
Red Bull knows the corporate drill. At its website (redbull.com), an
enormous amount of content is dedicated to dispelling (unpleasant) myths
and criticisms associated with its product. A link called Red Bull in Theory
and Practice answers questions such as Has Red Bull ever been
banned?, Who has examined and reported on Red Bull?, s Red Bull
addictive?, s Red Bull a doping substance?, and At what age is it
appropriate to start drinking Red Bull? with statements such as "No
authority in the world has ever discovered or proven an unhealthy effect in
or from Red Bull adding (rather arrogantly) "How could they? Red Bull
even includes a comic segue addressing the popular urban myth that its
product is made from bull testicles (it's not).
For now, Red Bull's market dominance seems assured. No other
competitors have either the distribution channels or, more importantly, the
posture of rebellious infamy to be considered real threats. However, it
would only take one or two public catastrophes such as the publicly-
lamented deaths of the teenagers who used the health supplement
creatine to send Red Bull's (already feigned) legitimacy into a downward
spiral. Then again, alcoholic mixers, regardless of the dangers involved,
never really go out of style until they are forcefully removed from store
shelves.

Red Bull GmbH


Address
8runn 113
A3330 luschl am See
AusLrla

1e|ephone (43) 662 63 820
Iax (43) 662 63 8231
hLLp//wwwredbullaL

Stat|st|cs
r|vate Company
Incorporated 1984 as 8ed 8ull CmbP
Lmp|oyees 1300
Sa|es Lu8 113 bllllon ($132 bllllon) (2002)
NAIC 312111 SofL urlnk ManufacLurlng


Company erspect|ves
8ed 8ull ls much more Lhan a sofL drlnklL ls an energy drlnk lL was made for momenLs of
lncreased physlcal and menLal sLress and lmproves endurance alerLness concenLraLlon and
reacLlon speed ln shorL lL vlLallzes body and mlnd 1he effecLlveness of 8ed 8ull Lnergy urlnk has
been proven by a large number of sclenLlflc sLudles and ls appreclaLed by many of Lhe worlds Lop
aLhleLes and drlvers oplnlonleaders and hardworklng people wlLh acLlve llfesLyles


key Dates
1982 uleLrlch MaLeschlLz samples kraLlng uaeng a 1hal energy drlnk
1984 8everage producer 8ed 8ull CmbP ls founded ln AusLrla
1987 8ed 8ulls producL beglns sales ln AusLrla
1992 8ed 8ull CmbP expands Lo lLs flrsL forelgn markeLs
1997 8ed 8ull enLers Lhe uS markeL vla Callfornla
2003 8ed 8ull Sugarfree ls lnLroduced closely 1he 8ooqkok lost reporLed LhaL more Lhan a
hundred oLher brands had Lrled Lo copy 8ed 8ulls formula ln Lurope
8ed 8ull made lLs flrsL forays lnLo Lhe souLhern hemlsphere vla SouLh Afrlca and 8razll ln 2001 ln
CcLober 2002 8ed 8ull opened a reglonal headquarLers ln uubal and was plannlng Lo bulld a planL
Lhere as well 8ed 8ulls worldwlde sales were esLlmaLed aL Lu8 14 bllllon ($132 bllllon) ln 2002
Much of 8ed 8ulls success ln Lhe unlLed SLaLes can be aLLrlbuLed Lo Lhe dedlcaLed onebrand
dlsLrlbuLlon neLwork operaLed by Lhe company MaLeschlLz seL up a separaLe company Lo develop
and markeL oLher drlnks lncludlng LunAqua a new Age brand of waLer boLLled durlng full moons
A sugarfree verslon of 8ed 8ull was rolled ouL ln !anuary 2003


Company n|story
Red Bull GmbH produces the world's leading energy drink. More than a billion cans a year are
sold in nearly 100 countries. Red Bull holds a 70 percent share oI the world market Ior energy
drinks, or Iunctional beverages, a category it was largely responsible Ior building. Its dominant
position in the Iastest-growing segment oI the soIt drink market in a number oI countries has
drawn a number oI imitators. Red Bull has become a case study in successIul guerilla
marketing in the United States and United Kingdom. Marketing is aimed at hip young people
with active liIestyles, though the Iormula began as a popular tonic Ior blue collar workers in
Thailand.
Globetrotting Origins
Dietrich Mateschitz was born in 1946, a native oI the Styria (Steiermark) region oI Austria. As
a student in Vienna, he studied world trade and commerce. AIter graduating, he worked Ior
Unilever, then Blendax, a German manuIacturer oI toothpaste. This position involved much
global travel.
In 1982, Mateschitz visited Thailand and brought home with him a number oI energy drinks he
sampled there. According to The Economist, Mateschitz was sold on a product called Krating
Daeng aIter it took away his jet lag. He later claimed to consume up to eight oI the drinks a day.
Krating Daeng, which is Thai Ior "Red Bull," was a drink popular among cab drivers and other
blue collar workers. It had been produced since the early 1970s by the T.C. Pharmaceutical Co.,
Iounded in Thailand in 1962 by Chaleo Yoovidhya, a Blendax licensee. (T.C. Pharmaceutical
eventually Iormed the subsidiary Red Bull Beverage Co. Ltd.)
Mateschitz Iounded Red Bull GmbH in Austria in 1984 as a 49 percent partner with Chaleo
Yoovidhya and his son. The company began marketing its namesake drink in Austria in 1987; a
million cans were sold in the year.
The original Iormula was altered Ior Western palates. Some ingredients were dropped and
carbonation was added. Components oI the legendary elixir included B vitamins,
glucuronolactone, sodium, and caIIeine. One ingredient, the amino acid taurine, was derived
synthetically, not Irom bull testicles, as rumor had it. Red Bull's selling proposition was that it
increased stamina and mental concentration, making it a natural Ior one oI the original target
users, long-distance drivers. The taste oI the thick yellow beverage, said to be akin to liquid
gummi bears, lent added distinction to the brand.
nternational Expansion in the s
Red Bull's distribution expanded into neighboring countries Hungary and Slovenia in 1992.
Red Bull was introduced in Germany in March 1994. By June, it was claiming a quarter oI the
sports drink market there, reported the Associated Press, putting it ahead oI Gatorade. It was
priced about three times as much as a can oI Coca-Cola. Red Bull was introduced in the United
Kingdom in 1994 and marketed there as Red Bull Stimulation aIter 1996.
Red Bull entered the United States in 1997, Iocusing at Iirst on Iour western states: CaliIornia,
Oregon, Texas, and Colorado. It was marketed to Americans as a non-corporate alternative to
Coke and Pepsi, and both packaging and pricing helped set it apart. The drink was sold in
unique, narrow 8.3-ounce cans Ior $2 a pop.
Red Bull associated itselI with the nascent extreme sports movement. The company sponsored
snowboarding and Ireeskiing contests and Flugtag, a homemade Ilying machine challenge
(Mateschitz was an enthusiastic collector oI vintage aircraIt).
While Red Bull had appealed to athletes and, in the United States, tired white collar workers,
the real story oI Red Bull's growth lay in the promise oI Iurther endurance at clubbing, giving it
a special appeal Ior young people exhausted Irom working hard all week. The Los Angeles
Times reported that the beverage appeared to glow green under the Iluorescent light oI
nightclubs. The drink became a very popular mixer, especially with vodka. Red Bull deepened
its involvement with the club scene by sponsoring a month-long school Ior deejays in New
York City called the Red Bull Music Academy.
Worldwide sales were logged at 300 million cans in 1998 by Beverage World. By the end oI
1999, Red Bull was sold in more than 50 countries, and sales estimates varied between 600
million and one billion cans worldwide. Red Bull led the energy drink category in the United
States and the United Kingdom, where it displaced the venerable Lucozade brand owned by
pharmaceutical company SmithKline Beecham (later GlaxoSmithKline).
The company promoted the liIt the beverage oIIered with the slogan "Red Bull gives you
wings." Traditional advertising was limited, as the company Iocused heavily on getting product
samples into the right hands. The company sometimes put up edgy, graIIiti-style billboards. In
the late 1990s, Red Bull produced animated TV ads Ior mature markets.
By this time, Red Bull GmbH was the most highly valued company in Austria, worth about $11
billion according to one estimate. This made Mateschitz, with his 49 percent holding, the
country's richest individual.
ontinued Success in the 2s
Mammoth beverage marketers such as Coca-Cola Co. and Anheuser-Busch were pouring out
new drinks designed to capture a share oI the success oI "cult" energy drinks, a $300 million
market. PepsiCo acquired South Beach Beverages, maker oI the SoBe brand, in 2000, and
Quaker Oats, owner oI Gatorade, the next year. Liquor distributors were also eyeing Red Bull's
share oI the mixer market, introducing pre-mixed premium drinks such as SmirnoII Ice. Former
Red Bull employees launched a competitor, Roaring Lion, in 2001, its marketing and
distribution tailored Ior the nightclub market.
Red Bull sued a number oI bars Ior surreptitiously substituting knock-oIIs when customers
ordered mixed drinks speciIying Red Bull. Red Bull's Australian distributor rolled out its own
competing beverage called LiveWire. A court later Iound Sydneywide Distributors copied Red
Bull's packaging too