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First introduced in Asia in the late 1960s, Red Bull began a small revolution in the global soft drinks market in the 1990s. Since its European launch in 1987, the sickly sweet stimulant has created a whole new niche of "energy drinks", forcing soft drinks giants Coke and Pepsi to play an undignified - and still largely unsuccessful - game of catch-up. Meanwhile, Red Bull itself now qualifies for megabrand status, with retail sales of over $15bn annually. It must be true; Red Bull really does give you wiiings... Nevertheless, there is no shortage of supervisory bodies keen to clip those wings over recurring but still unproven concerns that Red Bull carries health risks because of its caffeine content or even encourages under-age alcohol consumption by acting as a "trendy" mixer for vodka. So far, Red Bull has successfully fought off those complaints.
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The most noticeable change in the world soft drinks market since the start of the 1990s has been its massive fragmentation. Although fizzy colas continue to dominate, their share of the market has been steadily undermined by a plethora of new sub-sectors: still drinks, "new age" health drinks, yogurt smoothie drinks. But above all "energy" drinks. This is a sector created virtually single-handedly by Red Bull. A number of would-be contenders have attempted to match its success, but few have stayed the course.
Despite the competition Red Bull retains undisputed command of the market. Its principal manufacturer, privately owned Red Bull GmbH of Austria, sold more than 6.06bn cans of the product in 2016 in 171 countries worldwide. (The Austrian company owns rights in all but a few countries, notably China and Thailand). Euromonitor estimated global sales worth $12.5bn in 2015, around 2.6 times closest rival Monster and over 11 times third-ranked Rockstar. Performance dipped slightly for the first time in 2009, dented by economic factors as well as currency fluctuations. However there has been a strong rebound since 2010, aided by the group's many sports sponsorship arrangements. Sales may be flat in some older territories, but that has been offset by spectacular in markets such as Turkey, India and South Africa. Group revenues topped €5bn in 2013. The group has around 30% share of the global energy drink market, according to Euromonitor, compared to just 16% for nearest rival Monster. PepsiCo's own portfolio (including Gatorade) had just 13%, followed by Rockstar (12%) and Coca-Cola's Burn and other products (10%).
In the US, Red Bull's second biggest market, industry monitor Beverage Digest estimated total local sales of almost 114m cases in 2014, up almost 6% on the previous year. That's still just a drop in the ocean, equivalent to just 1.3% share of the whole carbonated soft drinks market. However, in the energy drink segment, Red Bull had around 38% share by value of the US market, followed by Monster at 27% and Rockstar at 8%. According to IRI, Red Bull generated retail sales of $3.43bn in the US in 2013, compared to $3.15bn (or 35% share) for Coke-distributed Monster. Rockstar, distributed by PepsiCo, was some distance behind at $820m or 9% share.
In the UK, IRI measured retail sales of £305m for the year to March 2017 (in The Grocer). Red Bull is the country's 5th largest branded soft drink by value. UK sales are a little under twice energy rival Monster, but well behind more mass-market Lucozade. Around an additional £111m came from the "on trade" (pubs, clubs etc).
So why so successful? Because most countries' distribution systems are tied up with giants Coke and Pepsi, Red Bull entered each of its markets through independent distributors, targeting trendy bars and nightclubs as its first outlets. As a result Red Bull quickly built up a strong word-of-mouth following and acquired a reputation as something close to a legal drug, especially when combined as a mixer with vodka. To begin with the company also allowed a number of fanciful myths to circulate, for example, that each can contained an excessive amount of caffeine to give a quick hit rush. (In fact, one can contains only the same amount of caffeine as a single cup of ordinary filtered coffee). Another rumour was that its principal ingredient, taurine, was derived from bull's semen in order to boost testosterone levels. Again, untrue. Taurine is an amino acid which occurs naturally in the human body (and is found at its most concentrated in breast milk). And although Taurine was first naturally discovered in cattle in the 1960s, Red Bull's ingredient is entirely synthetic.
While this misinformation served to boost the drink's popularity during the 1990s, it began to get the company into trouble with the law mid-decade after a handful of incidents in which people suffered heart attacks, supposedly after drinking the product. Despite a series of lengthy investigations, there was no evidence of any direct connection to the drink, and Red Bull is now careful to dispel any rumours about the drink's exaggerated effects, and tries to discourage its user as a spirits mixer. Nevertheless, Red Bull is still prohibited in several countries because of its taurine or caffeine content. In 2008, the drink was accepted for distribution in France for the first time after the company agreed to replace the taurine in local supplies with another amino acid, Arginine. It is still banned in Iceland and Uruguay, and during 2009 several countries including Hong Kong, Qatar and the UAE suspended sales over rumours - vigorously denied by Red Bull - that the drink contains traces of cocaine.
Yet the drink and its competitors continue to be carefully marketed to the more adrenaline-soaked end of the market. Red Bull's biggest sales channel worldwide tends to be through bars and clubs, closely followed by convenience stores and petrol stations (where it is bought by tired drivers facing a monotonous and sleep-inducing motorway journey).
The company sponsors a range of extreme sporting events, the more extreme the better, ranging from mountain-biking and snowboarding to "flugtagging" in home-made high altitude motorised gliders and wakeboarding through underground Missouri caverns. Its most extreme stunt to-date was sponsorship of Red Bull Stratos, an astonishing space jump by skydiver Felix Baumgartner in October 2012. Baumgartner succeeded in freefalling some 23 miles from the edge of space, breaking the speed of sound. In a distinct change of direction, the brand turned its attention to a more mature audience in 2004, agreeing to sponsor premier golfing event, the PGA European Tour. Later that year Red Bull agreed to purchase the Jaguar Formula 1 motor-racing team from Ford, later rebranded as Red Bull Racing. It has been the winning team in both the drivers' and constructors' championships for four consecutive years between 2010 and 2013, largely thanks to star driver Sebastian Vettel, the youngest ever to capture four drivers' wins. In the final year of that astonishing victory run, Vettel set a new world record as the only driver ever to win nine consecutive races in a single season, and only the second to win 13 in the season as a whole. Red Bull also acquired struggling Italian F1 team Minardi in 2005, renamed Toro Rosso.
In 2006, Red Bull acquired low-achieving US Major League Soccer team the New Jersey Metrostars, and renamed it the New York Red Bulls. The company also set about building America's biggest soccer stadium as the new home for the team in Harrison New Jersey. That arena, construction of which cost Red Bull $220m, opened in 2010. In 2009, the company sponsored a major professional snowboarding event, Red Bull Snowscapers, in New York, and agreed an endorsement relationship with NFL running back Reggie Bush of the New Orleans Saints. There are similar relationships with Olympic Beach Volleyball gold medallists Todd Rogers and Phil Dalhausser, motocross champion James Stewart and X Games champion Shaun White among many others. The group also owns Austrian football club FC Red Bull Salzburg. It sponsors a number of grass roots football events in the UK, including a five-a-side tournament co-promoted with Brazilian soccer star Neymar Jr. In late 2016 it was reported to have offered £650m to acquire English Premier League football team West Ham United, but was turned down. It also considered a bid for smaller Coventry City, but finally abandoned attempts to establish a presence in English football in early 2017. It is also a leading sponsor of athletics in the UK.
Another important promotional vehicle is the Red Bull Music Academy, an annual event which celebrates and discusses all aspects of the creation and dissemination of popular music. A cross between a conference and a training session it is held each year in a different city. Although anyone can apply to attend, the event is targeted primarily at DJs, musicians and sound engineers. Only 60 individuals are selected to take part, with the aim of bringing together "some of the most original and creative minds in music will come together to share ideas, work on tunes, and perform in the best vibe-filled venues around town".
The group also publishes a global monthly magazine, Red Bulletin, sold on newsstands or sent direct to followers of its sporting activities. As of the beginning of 2011 it was available in the UK, Germany, Austria and Poland as well as South Africa and New Zealand. Total distribution was around 3.4m copies per issue. In Spring 2011 the magazine launched in the US for the first time, with more than 1m copies distributed free with several leading newspapers including Los Angeles Times and New York Daily News. All of the group's editorial content and its online channel Red Bull TV is developed and managed by subsidiary unit Red Bull Media House.
A sugarfree variant of Red Bull was introduced successfully in several markets in 2003, and was followed in 2009 by Red Bull Energy Shot, a concentrated version of the normal drink, with the same caffeine content in a smaller can. It was introduced in the US, and then rolled out in Europe mid-year. The most recent additions to the portfolio are Red Bull Editions, which launched in German-speaking markets in 2011 and are gradually being rolled out in other markets. These offer alternative flavours to the standard cherry concoction. They include cranberry (Red Bull Red Edition), blueberry (Blue) and tropical fruits (Yellow). New editions have been launched every year. Red Bull Summer Edition was the top-selling new launch in any soft drinks category in the US in 2016. A no-calorie version of the main product, Red Bull Total Zero, has also been introduced in selected markets.
The main problem facing Red Bull is the lack of any supporting brands. The company tested bottled water brand LunAqua in several European markets in 2001. (Typically, the marketing promised that LunAqua was only bottled 13 times a year, under a full moon, for added potency...) The product failed to take off and was later discontinued. In 2005, the group tried another tack altogether, with the launch of fast-food restaurant chain Carpe Diem in Austria and other German-speaking markets. In 2006, there were press reports in Austria, denied by the company, that Red Bull had held talks with PepsiCo regarding some form of deal. In 2008, Red Bull confirmed plans to launch its own cola variant, Red Bull Simply Cola, in seven global markets including the UK, US, Austria, Italy and Switzerland. It is made entirely from natural ingredients and, says Red Bull, is the only cola which contains both the original kola nut and de-cocainised extract of coca leaf. Nevertheless German researchers claimed in 2009 to have found traces of cocaine in the drinks and several German states suspended sales as a result. It was quickly reformulated. However sales have been very weak compared to the main product line.
In Thailand, where the brand originates, Red Bull is still owned by original founding company TC Pharma. That company also still makes all the flavour base for global supply and owns the Red Bull trademark. Red Bull GmbH has distribution and manufacturing rights to virtually all other global markets except - significantly - China. In the latter market, where it is known as Hong Niu, it is majority owned by a unit of TC Pharma, but distributed and marketed by Reignwood Group, a company controlled by Chinese entrepreneur Yan Bin, also known by his Thai name, Chanchai Ruayrungruang.
Dietrich Mateschitz is chairman of Red Bull GmbH, and has a 49% shareholding in the company. Bloomberg estimated net worth of $12.3bn for Mateschitz in 2016, making him Austria's richest man. Aged 72 in 2017, he rarely gives interviews, but early that year told Austrian newspaper Kleine Zeitung that he was considering launching a right-wing media outlet similar to US company Breitbart.
The remaining shares in Red Bull GmbH are owned by the Yoodvidha family of Thailand, although they play no part in the international business. Chaleo Yoovidhya, the original creator of Red Bull, was the chairman and owner of TC Pharmaceuticals, and also one of Thailand's richest individuals at the time of his death in 2012 at the age of over 80. He also had 49% of the company. Chalerm Yoovidhya, Chaleo's son and main heir, already controlled the remaining 2% stake, apparently as a gift for having introduced Mateschitz to his father. Following Chaleo's death, his estate was divided between all 11 of his children. Chalerm heads the family's investments but his more serious brother Saravoot Yoovidhya is now CEO of TC Pharma. Seven of the Yoovidhya heirs also control a large minority stake in Red Bull China. The family's combined wealth is estimated by Bloomberg at around $22bn in 2016.
Although it is widely known that Red Bull was first launched in Europe by an Austrian company, the drinks' roots are in Asia. In the mid-1980s Austrian-born Dietrich Mateschitz worked for Blendax, the German cosmetics company acquired by Procter & Gamble. While visiting the company's licensees in Asia, he came across Krating Daeng, a still beverage originated in 1975 in Thailand by local company TC Pharmaceuticals. Known locally as "poor man's coffee", Krating Daeng was one of many caffeine-enriched drinks produced throughout Asia. However in Thailand it was the market leader, with around half of the country's $285m health-tonic market.
Mateschitz bought foreign rights to the brand from TC's owner Chaleo Yoovidhya, with the intention of introducing the drink into his home market. He returned to Austria and began tweaking a few of the ingredients and also carbonating the drink. He also worked with a friend who owned a small Austrian advertising agency, Kastner & Partners, to come up with a name and an image for the drink. They chose as the product's name Red Bull, an English translation of Krating Daeng, and the tagline "Gives you wings". (The charging bull logo was borrowed intact from Krating Daeng.)
The drink was launched in Austria in 1987, initially through petrol stations and traditional retail outlets. But it was quickly adopted by clubbers, who began asking for it in discos. By the early 1990s, the drink had become a substantial business in Austria, and was introduced in Hungary in 1992. The following year the product launched in the UK, followed by Germany a year later. At around the same time it began to be imported into the US for sale in nightclubs. The company established an office in California in 1997 and launched the drink in New York and Seattle. National distribution started in 2001.
The drink is now available in more than 160 countries, inspiring the launch of numerous competitors. In 2002, Red Bull successfully forced South African rival Mad Bull to change its name to avoid confusion.
Last full revision 26th April 2017
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