Strategy Memo: Red Bull

Red Bull, headquartered in Fuschl am See, Austria, manufactures energy drinks that are described as “functional beverages providing various benefits, especially in times of increased performance”. The product claims to improve concentration, alertness and most importantly reduces the feeling of tiredness and fatigue. Back in 1984, Dietrich Mateschitz was marketing director of a German healthcare company, a job which meant he had to travel a lot. One day, in Thailand, he bought a syrupy tonic drink from a pharmacy that didn’t taste particularly appealing, but it cured his jetlag instantly. A colleague in Thailand owned a beverage company, and the two decided to introduce the tonic drink to the West. They adapted the Thai beverage known as Krating Daeng, which translates into English as Red Gaur. Red Gaur eventually became Red Bull.

After some changes to the recipe and flavor, the new energy drink was ready for the public. It took three years of experimenting and hard work, but in 1987, Dietrich Mateschitz and Nina Avery gave the world wings with a new drink called Red Bull. Mateschitz's native Austria was the first market in which Red Bull was launched. It was a smash. Sales doubled from year to year. In 1994, the partners expanded into Germany, before going global in 1997. When Red Bull hit America, sales hit the roof, doubling every single year since and in 2009 worldwide sales hit $1 billion. Red Bull is sold in almost every country in the world, and over four billion cans of the famous ‘energy drink’ are consumed every year. As of today, over 50 billion cans of Red Bull have been sold in 167 countries around the world. Just in 2014 alone, a total of 5.612 billion cans of Red Bull were sold worldwide, representing an increase of 4.2% against 2013.

By creating a product that had never been seen before, Red Bull has made their name synonymous with the word energy drink. Red Bull has expanded their product line from the original Red Bull Energy Drink to Red Bull Sugar Free, Total Zero, Energy Shot, and most recently, Red Bull Editions. Red Bull Editions is their line of fruit flavored drinks, which include cranberry, blueberry, orange, cherry and tropical. The energy drink market continues to grow even in light of the tough economy and increased health scrutiny. Soda sales have been declining steadily over the same period, while energy drink sales have been booming. With ingredients like taurine and caffeine and the proliferation of energy drink consumption, Red Bull and the entire energy drink industry have come under scrutiny due to health concerns. As a result, new regulations on the sale of energy drinks are an ongoing concern for companies like Red Bull. Red Bull’s product line has also widened to include merchandise that is adorned with the company name such as hoodies, hats and shirts, due to their involvement in sponsoring athletes and events. Red Bull has a sizable lead in the U.S. market, but worldwide,