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RED BULL GmbH: IT GIVES YOU WINGS* r r r r r r r r

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INTRODUCTION the unique agreement gave Mateschitz the right to market Red
Bull to every country in the world except Thailand. Meanwhile
In the 1980s Austrian marketing executive Dietrich Mateschitz TC Pharmaceuticals could continue to market Krating Daeng
traveled regularly to Bangkok, Thailand, for business. Each anywhere. Also the new company would have full access to the
time he arrived he rolled off the airplane in an exhausted, jet- brand name, logo, and formulation. Red Bull GmbH, an
lagged fog. He found relief and a solution to his problem in the Austrian company, was born.
local Thai energy tonic, Krating Daeng. He drank it. He was
revitalized. So he was able to do his business. THE PRODUCT
Mateschitz was a marketing executive for the German
toothpaste maker, Blendex. The reason he frequented Bang- A Single Product Strategy
kok was to visit TC Pharmaceuticals, which was the regional
After securing his marketing deal in 1984, Mateschitz went
authorized manufacturing partner for Blendex. Coincidentally,
about refining the recipe of Krating Daeng to create a taste that
TC Pharmaceuticals also manufactured Krating Daeng.
could make his vision come true. The results were distinctive.
Mateschitz was so inspired by Krating Daeng that he
While the original Thai version was thick, sweet, and flat in
approached the owner of TC Pharmaceuticals with a proposal
taste, the new Red Bull emerged lighter, berry flavored, and
to market it to the rest of the world. At that time there was
carbonated. He put it in a tall thin blue can and targeted a
literally no market for energy drinks outside of Asia. Mateschitz
young, hip, hard playing, and hard partying demographic.
told him, “No market exists for Red Bull, but I will create one.”
The price for Red Bull is set high. Mateschitz felt that it
So through a unique marketing agreement, a reformulation
needed to cost at least 10 percent more than any competitor or
of the drink for international tastes, and a revamped marketing
substitute for its benefits to be taken seriously. Although
plan, the company Red Bull was born. Over 25 years later, Red
flavorful, Red Bull is not meant to be consumed like a soft
Bull stands out as a unique success story showing how one
drink. Rather it is intended to energize and give its drinkers an
great product and the right marketing mix can take the world
“edge” in times of physical or mental stress. The ingredients
by storm.
that provide this kick are Taurine (an amino acid), Glucur-
onolactone (a carbohydrate), B-vitamins, caffeine, and sugar.
ENTERING THE MARKET The key ingredient is Taurine. Red Bull asserts that under
times of duress the body excretes too much of it, causing
A Unique Marketing Agreement decreased performance. It claims that drinking Red Bull
The way Mateschitz entered the market is one of the most replenishes the lost Taurine to allow the drinker’s body to
interesting parts of the Red Bull story. He could have devel- regain its full vital processing and thus enhance performance.
oped his own, similar, energy drink, or he could have negoti- Red Bull has, basically, been a single-product company with
ated to purchase the Krating Daeng brand. However, he chose a single-product strategy. This strategy has worked to catapult
a different route. He crafted a marketing agreement with TC the brand to the top of a market, which it has defined. However
Pharmaceuticals owner, Chaleo Yoovidya. This allowed him to reliance on just one product is fraught with several risks. Most
springboard off the competencies and existing infrastructure of importantly what happens if the product falls out of favor with
TC Pharmaceuticals and enter the market with minimal consumers due to changing tastes, demographics, marketing
upfront investment. blunders, or reputation problems? Furthermore there is the
An agreement was reached. Each partner invested $500,000 lost opportunity cost of profits not earned from expanding the
of seed money. Mateschitz and Yoovidya each took a 49 per- brand. To some extent Red Bull has addressed this issue with
cent stake in the company. The remaining 2 percent stake was the release of three additional Red Bull beverages in certain
given to Yoovidya’s son, Chalerm. Although the Thai side of countries; Red Bull Energy Shots, Red Bull Sugarfree, and
the ownership equation had a slightly majority stake, it was Red Bull Cola. However, these are essentially just differenti-
decided that Mateschitz would assume full responsibilities for ated versions of the original Red Bull, and the company has yet
running the new company. Both the company and the product to extend beyond that concept. Outside the scope of the Red
would be called Red Bull, a translation of the name Krating Bull brand, the company has actually ventured into several
Daeng into English. The original Krating Daeng formulation complementary businesses. There are a Red Bull–sponsored
would be modified into a lighter and bubblier recipe. Finally soccer team, a Formula 500 team, and an aerobatic aircraft

*
This case was prepared by Yuko Hayashi, Nobuko Nitta, Melissa Snyder, and Barbara Zelaney of the Fox School of Business at Temple University Japan
under the supervision of Masaaki Kotabe of Temple University for class discussion rather than to illustrate either effective or ineffective management of a
situation described (2012).

1
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2 • Red Bull GmbH: It Gives You Wings

team. Also a subsidiary brand, Carpe Diem, has been created operating outside the realm of normal convention. Despite the
to sell healthy and natural beverages. Additionally, the com- extra years it took to finish college, he is widely regarded as a
pany bought Laucala Island in Fiji where it built and now standout marketing genius. The fact that he was able to
operates a seven-star resort. A one-night stay will cost you convince Yoovidya to agree to the Red Bull deal at all is a
$27,000 per night! So although the company has diversified into true testament to his charisma, networking skills, and drive. His
other areas, it seems very reluctant to dilute the Red Bull brand strong leadership has allowed him to take his creative vision
itself. The brand personality is focused, uncompromised, and at and transform it into a number one global brand. Although he
the very core of the marketing strategy. has one son, Mateschitz is single and vows that he always will
be. He embodies the same sort of fast-paced energy that Red
THE COMPANY Bull represents.
Since Red Bull Gmbh is privately owned and Mateschitz is
A World Leader its lifeblood, it brings about issues of successorship. Now in his
60 s, Mateschitz has worked hard to realize his vision of Red
Red Bull was first introduced in 1987 in Austria. With one Bull and has reaped the rewards. Is retirement on his horizon?
secretary and a six-person sales team, Mateschitz set out to sell Either way Red Bull will still at some point, in the not so distant
the product in bars and retail outlets. It caught on immediately, future, be looking at the need for a new CEO. Several options
and the brand exploded leaving Mateschitz eager to push Red exist. Will the company just hire a new CEO? Will the
Bull beyond the borders of his home country. Singapore came Yoovidyas and TC Pharmaceuticals buy out Mateschitz’s
next in 1989. However, expansion into Europe immediately hit share? Certainly the prospect of going public with an IPO
political roadblocks. or selling out to a competitor has been considered. Since the
In the 1980s Austria had yet to join the European Union company is private, nobody is sure what will happen. However,
(EU). In order to gain approval to sell Red Bull in the EU, at it brings to mind questions of the future viability of the brand
least one of the member countries needed to list all of the without Mateschitz. When asked about it in an interview,
included ingredients on an “approved list.” At the time Tau- Mateschitz indicates that he intends to extend the brand by
rine was only on Scotland’s list; and Scotland was not an pushing it into the future; he says, “We have the next hundred
obvious first-choice entry point for expanding the brand. years in front of us.”
However, another law mandated that if a product was
approved for sale in one EU country, then it was legal to
sell in all EU countries. So Mateschitz launched Red Bull in PROMOTION
Scotland and used it as a backdoor to gain approval to push the
product into the rest of Europe. It spread like wildfire. When A Youthful Demographic
Red Bull launched in Germany in 1992, the company could not When Mateschitz launched his company he wisely cherry-
keep up with demand of 1 million cans a day. Halfway through picked from the marketing strategy of the original product.
the first year, Red Bull disappeared from shelves. As Red Bull He retained certain features of the brand while revamping
struggled to fix its supply chain hiccup, a black market actually other aspects. The original Krating Daeng was marketed to a
sprang up which only served to increase demand: 1995 brought blue-collar, working-class demographic. It was a cheap pick-
the first profits and Red Bull hit the shores of the U.S. market me-up to help Thai shift workers and drivers stay awake on the
in 1997. job. Mateschitz’s vision for his version of Red Bull did not
Today Red Bull is sold in 160 countries worldwide, with target this demographic. Instead, he decided to create an
sales of about 4 billion cans a year. The company is based in energy drink for young vibrant people that would fuel a
Fuschl am See, Austria. The actual headquarters consists of “play hard, party hard” lifestyle. An 18 to 25 year-old demo-
two volcano-shaped buildings rising out of a lake. The archi- graphic was targeted. Red Bull’s slogan is “It gives you wings,”
tecture is aptly intended to represent Red Bull’s energy. The promising optimum focus and performance for its drinkers.
product is produced in only two locations worldwide. Red Bull The premium price point is justified by this added value of
has made the interesting choice to outsource all of its produc- getting “wings.” Athletes, students burning the midnight oil,
tion. One factory in Austria produces all of the world’s Red and party animals were all promised that extra edge from Red
Bull except for the U.S. market. In order to minimize trade Bull. Instead of the glass bottles and the squat gold cans of
issues between the United States and the EU, a plant in Krating Daeng, Red Bull is packaged in sexy, sleek blue and
Switzerland makes all of the American-bound Red Bull. silver cans.
This supply chain requires that all of the cans have to be
shipped globally before finally reaching consumers. The com-
pany is still privately owned under the original structure set up
Initial Promotion
in 1982. Before he took Red Bull to market, Mateschitz commissioned
a marketing research test for the brand-new Red Bull. The
CORPORATE STRUCTURE initial tests showed that Red Bull was a bomb. Mateschitz
recalled with a smile, “People didn’t believe the taste, the logo,
A Key Man the brand name. I’d never before experienced such a disaster.”
The marketing research firm reported that 50 percent of those
Dietrich Mateschitz is the driving force behind Red Bull. tested hated it; but 50 percent loved it. Mateschitz thought that
Mateschitz is a native Austrian born to two primary school polarization gave it “edge,” ignored the market research, and
teachers who split up when he was young. From a career that went to market anyway. Initial promotion was nontraditional
began by taking 10 years to earn a marketing degree, he has and based on word of mouth and “creating a buzz.” Red Bull
risen to one of the world’s 300 wealthiest men. Mateschitz was promoted as a non-brand with a cult following. Mateschitz
tends to do things his own way and is completely comfortable said, “We do not market the product to the consumer, we let
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Red Bull GmbH: It Gives You Wings • 3

the consumer discover the product first.” Although this Red Bull parties and spread the brand image. These reps have
inexpensive guerilla marketing worked wonders in the early a finger on the pulse of the young market, and they keep Red
years, the company has upped its marketing expenditures to an Bull immersed in local hip culture.
estimated 30 to 50 percent of revenues. Red Bull has put its
money behind its non-traditional approach. TV advertisement, CONTROVERSY
billboards, and traditional print ads are shunned in favor of
events, sponsorships, and people-to-people approaches that From the beginning, Red Bull has been the subject of great
promote the cult of Red Bull. controversy. In many countries the ingredient Taurine is
considered a drug and must receive governmental approval
Website before being allowed in a product. Because of this, Red Bull
has been banned in many countries including France, Norway,
A visit to Red Bull’s flagship website leaves you with a real
and Denmark. The company has had to jump through many
sense of excitement for the brand. In today’s digital world, it is
political hoops in order to get approval to sell in these countr-
the perfect platform for reaching its young wired-in target
ies. France fought for over a decade to keep the controversial
customer. The website is a multimedia extravaganza that
Red Bull brand out of the country. Although Mateschitz met
includes layers of shocking and entertaining videos, but sur-
with French leaders over 10 times each year to try to break into
prisingly little information about the company or product itself.
that market, his real attitude was revealed when he told a
However if you are drawn to the energy and excitement of the
reporter, “They can survive without Red Bull, and we can
brand, it is understood that drinking Red Bull will follow.
survive without France.” This exemplifies the “thumb your
nose at them” attitude that is part of the product’s allure.
Sports Sponsorship Another issue arose when Red Bull launched its Cola, and it
Red Bull has also borrowed inspiration from Krating Daeng by was found to contain small traces of cocaine. This caused quite
using sports sponsorship as a promotional vehicle. Krating a ruckus in Hong Kong and Taiwan. These countries threat-
Daeng became famous by sponsoring boxing matches. In ened to pull Red Bull from the shelves until it was established
fact the original logo was developed to support this. It depicts that the trace amounts found were from the coca leaves used as
two bulls crashing together, head-on, like Thai boxers. It an ingredient, could not cause any detriment to the drinker in
evokes a spirit of strength, competition, and fearlessness. Since such amounts, and did not violate any drug laws. Tragically,
this is perfectly in synch with sponsoring extreme sports, there have actually been several deaths of young people after
Mateschitz carried the logo and the strategy into his brand. consuming numerous cans of Red Bull. Although there is no
If a sporting event involves danger and adrenaline, you can be evidence that Red Bull directly led to these deaths, they caused
sure that Red Bull will be there. It has become synonymous an uproar and created negative press coverage. The combina-
with backcountry snowboarding, racing, skydiving, and stunts tion of alcohol and Red Bull is another hot button issue. The
that test the limits of human endurance. Mateschitz has man- combination of Red Bull and vodka has become a favorite at
aged to take extreme sports sponsorship to a level that is clubs all around the world. Partiers credit the concoction with
unprecedented in its success. Currently, Red Bull sponsors allowing them to party all night and drink more alcohol without
teams, athletes, and events in every type of extreme sport that feeling the ill effects of getting too drunk. Canadian officials
you can imagine. These high-octane events fuel excitement for have become so alarmed by this trend that they require Red
the brand and define the Red Bull lifestyle. Bull to place a warning on cans stating that Red Bull should not
be consumed with alcohol. Since so much Red Bull ends up
Differential Marketing for 160 Countries being sold to clubs, this requirement puts the company in an
interesting position. In Canada, Red Bull cannot actively
Operating in 160 countries certainly requires differentiation. market its product as a mixer, but it also clearly markets to
However, Red Bull has managed to be surprisingly consistent bars. Another controversy surrounds the ingredient Taurine.
in its promotion and in its product worldwide. Its strategy and The internet has spawned an urban legend that claims the
aura of excitement resonates for drinkers all over the world. Taurine in Red Bull is actually derived from bull testicles.
The desire to “get wings” spans oceans of cultural differences. Although bull testicles can indeed be a source of Taurine,
That being said, there are minor differences incorporated into all that is used in Red Bull is 100 percent synthetically
different markets. Of course, packaging is printed in local manufactured.
languages. In some countries, the ingredients are listed on Although controversy has always surrounded Red Bull, it
the can, and in some they are omitted. Also the company has never interfered with the upward trajectory of sales and
maintains similar but differentiated websites for the various growth. Has it only added to the edgy and extreme aura that
markets. In Japan, a smaller can size was introduced in order to surrounds each can? Has it helped to further the company’s
appeal to local consumers, who are accustomed to smaller promotional goals? Red Bull embraces controversy. Red Bull’s
portions. One of Red Bull’s flagship promotions is the Free website has direct links to countless extreme sports videos that
Red Bull Car Campaign. A giant Red Bull can is mounted to are dangerous, amazing, and shocking. One Red Bull promo-
the back of a brightly painted vehicle. It is then driven to tional video featured a “BASE jump” from the Christ the
strategic locations where pretty girls hand out free Red Bull. Redeemer statue in Rio de Janeiro. This is a clearly illegal
Locally popular cars are featured, and the pretty local girls add activity that was sponsored by Red Bull and is now publicly
to the cultural appeal. Word of mouth and viral advertising are used in its promotion. Orchestration of this high dollar stunt
still key aspects of Red Bull’s promotion strategy. In the early required helicopters, support staff, and several camera crews.
years, free cases of Red Bull were distributed on college At the end of the clip, you see a waiting getaway car whisk the
campuses to create a buzz and get people talking. Red Bull skydiver away from his landing zone and into the city. The
still does this today by hiring campus representatives to host intentional squealing of tires as the car slips away is another
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4 • Red Bull GmbH: It Gives You Wings

way that Red Bull thumbs its nose at rules and convention. North America
Apparently, profanity, death defying danger, and disregard for Since Red Bull was launched in 1997, over 300 varieties of
law are all fair game when it comes to promotion for Red Bull. energy drinks from over 210 brands have flooded the North
The company used a similar tactic when it became apparent American market. “Me-Too” brands are everywhere. It is a $1
that France would be forced by EU regulations to finally allow billion pie, and everyone wants a piece. The segment currently
the product onto French shelves. Red Bull sponsored the same controls almost 5 percent of the non-alcoholic beverage mar-
stunt jumper, Felix Baumgartner, to “fly” across the English ket. Red Bull dominates with a 40 percent market share. The
Channel. At an altitude of 30,000 feet over Dover England, next-largest contenders are Monster and Rockstar, which
Baumgartner jumped out of an aircraft with a wing strapped to share another 35 percent. Some 200 other brands fight for
his back. He made the “flight to France” with millions of the rest of the market.
people watching. It was Red Bull’s way of saying to France, The entire segment promotes its products following Red
“See we can come to your country whether you like it or not.” Bull’s lead. Companies try to position the products as “quick
Soon thereafter Red Bull was allowed into France and the energy boosters,” heavy in caffeine and sugar, with connec-
stunt created the perfect marketing buzz to help make the tions to extreme sports, romance, and late nights. The Me-Too
French launch a huge success. marketing also extends into packaging considerations. The
majority of brands are offered in the 8-ounce style can origi-
COMPETITIVE ENVIRONMENT nated by Red Bull. Product taste is essentially similar across
brands. In fact, Red Bull has investigated and subsequently
Over the past decades the blue ocean market Red Bull created litigated against several nightclubs for substituting cheaper
has become saturated and mature. Yet Red Bull holds firmly to alternatives into drinks that were being advertised as Red
its number one position and continues to grow. At the same Bull & Vodka. The taste was so close that bars were getting
time, it is losing market share each year as the entire energy away with this switch with their customers, but not with Red
drink sector expands. Major global players like Pepsi and Coke Bull. The company says it uses litigation as a last resort but has
as well as smaller entrants are jumping in with both feet. a track record of defending the brand vigorously in court when
Mateschitz explains why he still believes that Red Bull will necessary.
continue to thrive. “We created the market. If you appreciate
the product, you want the real one, the original. Nobody wants
a Rolex made in Taiwan or Hong Kong.”

ASIA

2010 USA

CANADA

WESTERN EUROPE

2009 EASTERN EUROPE

LATIN AMERICA

MIDDLE EAST/NORTH AFRICA

2008 AUSTRALALIA

REST OF AFRICA
0% 50% 100%

Energy Drink: Volume by Region in millions of liters, 2008-2010.

7,000
5,914.10
6,000 5,292.40 5,555.90
5,000
4,000
3,000
2,000
1,000
0
2008 2009 2010

Global Energy Drink Volume in Millions of Liters, 2008–2010.

REDBULL 02/12/2014 15:25:18 Page 5

Red Bull GmbH: It Gives You Wings • 5

2008 SHARE OF ENERGY DRINK MARKET The Rest of Asia

(BY BEVNET)
In most Southeast Asian countries, as well as in China, Red
Brand % of Dollar Sales Bull finds itself in a very interesting competitive position.
One of its biggest rivals is the original Krating Daeng, which
Red Bull 40 is now also marketed with the Red Bull name. The tall blue
Monster 23 and silver cans sit side by side on shelves with the squat gold
Rockstar 12.3 cans of original Red Bull. Although the taste and packaging
AMP 8 are indeed differentiated, the premium price tag of Mate-
Full Throttle 4 schitz’s Red Bull seems to be the biggest difference in the two
products. Lucky Chaleo Yoovidya wins regardless of which
Red Bull product drinkers decide to purchase. The TC
Western Europe Pharmaceuticals version has recently been usurped as Thai-
land’s number one energy drink by a very similar product
In Western Europe where it all began, Red Bull has also kept a
called M-150. Whether M-150’s success will extend beyond
firm position, owning the market lead in 12 of 13 countries.
the borders of Thailand and how that will affect sales of
Another 17 percent of the market is shared among the top 20
Mateschitz’s Red Bull is still uncertain.
players while the rest consists of numerous small brands. Most
brands have imitated Red Bull’s choice of ingredients with a
combination of caffeine and Taurine, but many European Extended Markets
competitors have opted to go with a larger 250 ml can. Mad Africa, Russia, India, and Japan are the markets that Red Bull
Bat in Germany, Blue Monster in Spain, and Dark Dog in
is currently targeting for growth. Red Bull launched in India in
Greece are all competing brands that have chosen names that
2003 and created the market for energy drinks in that country.
mirror the Red Bull format. Shark, from Austria, has strength-
The market has exploded despite the fact that alcohol con-
ened to a number two ranking. Battery, owned by Carlsberg’s
sumption is frowned upon in, and Red Bull has an established
Finnish subsidiary Sinebrychoff, follows in third place. Battery
connection to the club scene. As the market blossoms with new
is the only product to outsell Red Bull in Finland. The product
entrants, Red Bull enjoys a dominant lead over competitors
is offered in a 330 ml can that is usually associated with beer.
Power Horse, Effect, and Fullpower. The high price makes
This deviation from Me-Too marketing has worked for Battery
Red Bull an out-of-reach luxury for some. However, incomes
and helped it stand out from the Red Bull–led pack.
are increasing in India, and a hard working, educated middle
class is growing rapidly. This demographic has shown a thirst
Japan for the product.
Japan has a saturated and competitive drink market. Unlike After overcoming some political problems, Red Bull has
other countries, the Japanese market is led by Nutraceutical experienced success in Brazil as well. In 1999, the product
drinks. Both pharmaceutical companies and soft drinks com- endured an all too familiar government ban before going
panies manufacture and sell these tonics. They offer the through yet another process of working its way back onto
drinker specific benefits. Chocola BB is good for skin care, the shelves.
Solmac is for hangovers, and other brands cover every ailment Africa is considered a very important market for Red
imaginable. Most drinks are sold in a small brown bottle with a Bull right now. Nigeria in particular has welcomed it with
screw cap and a small portion: generally less than 100 ml. When excitement and demand. The booming economy, local cul-
people feel they are tired and need energy, they go to a ture, and huge population offer the right mix for Red Bull to
pharmacy or a convenience store, choose one of the drinks thrive. More and more Nigerians can afford Red Bull, and
that are good for their symptoms, buy it and drink it in the store the kick that it offers resonates with local lifestyles and
and leave. Another popular drink unique to Japan is canned values.
coffee drinks, which are available everywhere. These are vastly
different types of energy drinks than Red Bull. Red Bull, CONCLUSION
however, creates confusion for the Japanese consumer.
Even though Red Bull has entered a Red Ocean market in The Red Bull story is an absolutely fascinating case of how
Japan, it really is the only energy drink of its type. If Red Bull’s unique marketing can be the principal driver of corporate
iconic marketing efforts can make the Japanese understand the success. Many consider it a classic example how an average
spirit of the brand and clarify the product, then perhaps its product can command a premium price by virtue of inventive
differences will allow it to stand out and take off. marketing techniques alone. Red Bull also proves that a single
Japan has become an extremely important target for Red product strategy can indeed catapult one product into a global
Bull. It is the world’s largest and oldest market for tonic drinks. brand with staying power. It is a prime example of how
Red Bull is so focused on success in Japan that the company partnering with an existing entity can be a winning market
has even gone so far as reformulating the ingredient list in strategy and a smart way to gain market entry. Red Bull has
order to satisfy regulators and gain market entry. The key also shown that political roadblocks can be overcome and
ingredient Taurine has been replaced with a different amino controversy can coexist with market leadership. Dietrich Mate-
acid that is approved for use in soft drinks. This is a vast schitz has succeeded in creating a market and defining a whole
departure from Red Bull’s worldwide strategy of offering a new paradigm of branding and promotion. His energy, convic-
consistent brand and not bowing to pressure from local tion, and drive to do things his own way have certainly given
regulators. Red Bull “its wings.”
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6 • Red Bull GmbH: It Gives You Wings

DISCUSSION QUESTIONS 4. What do you think about the Austrian version of Red Bull
1. Dietrich Mateschitz is the driving force behind Red Bull. competing against the Thai version of Red Bull in many Asian
What do you think the company should consider in terms of countries? Do you think that this will be an impediment to
his successorship? Red Bull’s growth in Asia?
2. Do you think that Red Bull’s youthful consumers will grow 5. Do you think that the controversy around Red Bull helps
out of Red Bull? Do you think this will affect its continued or hinders its marketing efforts? Do you think Red Bull has a
dominance of the market? What do you think that Red Bull Corporate Social Responsibility towards its consumers?
should do to address this issue in its marketing? 6. What do you think about Red Bull’s strategy in Japan? Do
3. Do you think that Red Bull should expand its product line you think this market is worth the emphasis that Red Bull is
or stick to a, basically, single product strategy? placing on it?