a global strategic marketing analysis of red bull & the energy drinks industry

5/26/2018 A Global Strategic Marketing Analysis of Red Bull & the Energy Drinks Industry

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Global

Strategic

Marketing:

An Analysis of Red Bull

By: Sam Deegan (20041091)


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Assignment Global Strategic Marketing Red Bull

1

Declaration

I certify that this assignment is all my own work and contains no Plagiarism. By submitting this

assignment, I agree to the following terms:

Any text, diagrams or other material copied from other sources (including, but not limited to, books,

journals and the internet) have been clearly acknowledged and referenced as such in the text. These

details are then confirmed by a fuller reference in the bibliography.

I have read the sections on referencing and plagiarism in the handbook or in the WIT Plagiarism

policy and I understand that only assignments which are free of plagiarism will be awarded marks. I

further understand that WIT has a plagiarism policy which can lead to the suspension or permanent

expulsion of students in serious cases.

Signed ___________________________ Date ______________


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Contents

Declaration .............................................................................................................................................. 1

Table of Figures ....................................................................................................................................... 4

1. Introduction .................................................................................................................................... 5

2. Analysis of the Energy Drinks Industry ........................................................................................... 6

2.1. Background ............................................................................................................................. 6

2.2. Industry Size, Growth & Profitability ...................................................................................... 6

2.3. Competitive Scope .................................................................................................................. 7

2.4. Market Leaders ....................................................................................................................... 7

2.5. Sales Model & USP .................................................................................................................. 8

2.5.1. Market Segmentation ..................................................................................................... 8

2.5.2. An Evolving Unique Selling Point .................................................................................... 8

2.5.3. Sales ................................................................................................................................ 9

2.6. Key Drivers in the Energy Drinks Market .............................................................................. 10

3. Company Analysis of Red Bull ....................................................................................................... 10

3.1. An Introduction to Red Bull .................................................................................................. 10

3.2. The Aims, Objectives & Values ............................................................................................. 11

3.3. Company Milestones ............................................................................................................ 11

3.4. Red Bulls Product Range ....................................................................................................... 13

3.4.1. Products ........................................................................................................................ 13

3.4.2. Product Positioning ....................................................................................................... 13

3.4.3. Target Market ............................................................................................................... 13

3.4.4. Competitors/Substitutes ............................................................................................... 14

3.4.5. Marketing Methods ...................................................................................................... 14

4. Conclusion ..................................................................................................................................... 16

4.1. Industry Analysis ................................................................................................................... 16

4.2. Company Analysis ................................................................................................................. 16

Bibliography .......................................................................................................................................... 17

Appendices ............................................................................................................................................ 20

Appendix IP.E.S.T.E.L of the Energy Drinks Market ....................................................................... 20

Political .......................................................................................................................................... 20

Economic ....................................................................................................................................... 20


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Social ............................................................................................................................................. 20

Technological ................................................................................................................................ 20

Environmental ............................................................................................................................... 21

Legal .............................................................................................................................................. 21

Appendix IIS.W.O.T ....................................................................................................................... 21

Strengths ....................................................................................................................................... 21

Weaknesses .................................................................................................................................. 22

Opportunities ................................................................................................................................ 22

Threats .......................................................................................................................................... 22


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Table of Figures

Figure 1 - Functional Sales Performance Overview ................................................................................ 6

Figure 2- Largest Energy Drinks Manufacturers Revenues.................................................................... 7

Figure 3 - Energy Drinks Sales Breakdown .............................................................................................. 9

Figure 4 - Company Milestones ............................................................................................................ 12
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1. IntroductionThis Report has been undertaken as part of the continuous assessment for the Global Strategic

Marketing module. The report consists of two individual sections, the first section examines our

chosen industry, the energy drinks industry and analysis it in terms of its size, scope & sales model.

In the second section we take a look at our chosen company operating within the industry, for this

we have chosen Red Bull. In this section we shall take an in-depth look at how the company

positions itself within the market, how it differentiates itself from competitors, what market

segment it targets & how it reaches them.


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2. Analysis of the Energy Drinks Industry2.1.Background

To analyse the scale & scope of the energy drinks Industry we must first define what an energy drink

is, according to (Merrieam-Webster Dictionary, 2014) an energy drink is:

usually a carbonated beverage that typically contains caffeine & other ingredients

(such as Taurine & Ginseng) which are intended to increase the drinkers energy

levels

The first recorded mass produced energy drink was produced in 1904. This energy drink is now one

of the most famous brands on the planet, Coca Cola. Coca Cola was the first drink ever marketed as

an energy booster & contained cocaine at the time of release. Prior to this the only stimulant drinks

available were natural ones such as Tea & Coffee. Over time the landscape of the energy drinks

market has changed, the first modern energy drink was sold in 1987 and its maker remains the

dominant player in the market to this day, which is Red Bull which we look further into in the

company analysis.

2.2.Industry Size, Growth & ProfitabilityThe energy drinks

market has

boomed in recent

years, according to

(King, 2013) energy

drink Consumption

has grown on

average 10% since

2007 bringing

consumption up

1.5 Billion Litres to

4.5 Billion Litres in

the space of just

four short years.

Considering these

figures the energy

drinks industry is

clearly a Bull

market, which is in

a phase of rapidexpansion as

Figure 1 - Functional Sales Performance Overview


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corroborated by Figure 1 to the right. This growth should not stifle in the near future due to the

burgeoning B.R.I.C.S economies which will represent new growth regions as the present markets

such as North America mature. A trustworthy Industry wide sales figure is hard to obtain in relation

to the energy drinks market, though (Zenith International, 2012) estimates the market to be worth

approximately $37 Billion, to put this in perspective (Smirke, 2013) placed the total revenue of the

global recorded music industry at $16.5 Billion, which demonstrates the growth that energy drinks

industry has undergone.

2.3.Competitive ScopeCompetitive scope is a concept developed by Michael E. Porter. Competitive scope can be Wide,

meaning the target market consists of many smaller market segments or Narrow, meaning it is

focused on a specific Niche (Porter, 1985). The Energy Drinks Industry itself focuses on a niche age

group of 18-34 year old males (Ackerman, 2013), though various companies are attempting to widen

their age appeal due to the increasingly more crowded market & entice a larger female consumer

base. This means that the once narrow focus is slowly widening, in part due to the existing aging

customer base, and also due to more mainstream sponsorships such as Formula 1.

2.4.Market LeadersThe energy drinks market operates on an international scale. The International market is an

oligopoly which is dominated by a small number large players, this is demonstrated below in (Figure

2). It is however clear that Red Bull & Monster Energy are by far the biggest players. These

companies are increasingly obtaining new customers at the expense of soft drink manufacturers

such as Coca-Cola & Pepsi.

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500

Red Bull

Monster

Rockstar

NOS

AMP

Full Throttle

5 Hour Energy

Largest Energy Drinks Revenue's ($ Millions)

Largest Energy Drinks Revenue's ($ Millions)

Figure 2- Largest Energy Drinks Manufacturers Revenues


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As a result we are seeing companies such as these exploiting their extensive distribution channels to

undercut many of the existing energy drinks makers, examples of this include Coca-Colas Burn

brand which is 40% cheaper than current market leader Red Bull (Trefis, 2014), but is yet to develop

its market due to its relative infancy compared to the other brands.

2.5.Sales Model & USP2.5.1.Market Segmentation

All the energy drink brands have tried to emulate the success of Red Bull & target the same segment

of 18-34 year old males (Ackerman, 2013). The methods used to reach this audience usually include

associations with various extreme sports like Snowboarding, Skateboarding, F1 and World Rally

Championship. Differences between products are generally confined to price, can size & flavour,

though there is an expanding market for more concentrated shot versions. In terms of price,

energy drinks are generally far more expensive than other soft drinks, of which Red Bull is far &

away the most expensive brand, newcomers tend to try undercut Red Bull to try achieve a greater

market share.

Energy drink can sizes are steadily becoming larger as competitors attempt to differentiate

themselves. Using larger cans portrays an image of improved value & highlights attempts to increase

per capita consumption rates which are generally quite low versus soft drinks (PR Newswire, 2013),

this has been very successful as this consumption figure has doubled since 2006. There is also a

growing segmented demand for new flavours, though the original energy drink flavourstill holds

68% of the market share according to (Canadean, 2013), it has shrunk from over 80% of the market

share in 2004. This is where brands such as Monster have traditionally had the most success in

attracting customers from Red Bull due to their limited range of flavours.

The newest threat to the traditional energy drinks brands is the emergence of energy shots such as 5

Hour Energy. These energy shots aim to provide the same benefits as the traditional energy drinks

such as Red Bull & Monster, but in a smaller package with fewer calories & sugar. The brandingthough is somewhat more distinctive, 5-Hour Energy positions itself as more of an energy

supplement than a beverage. Many of the players such as Red Bull & Monster have released

concentrated versions of their products to compete with these but as of yet have not gained the

same traction as 5 Hour Energy.

2.5.2.An Evolving Unique Selling PointEnergy drinks have underwent to some extent a perception change over the last decade, originally

they were seen as a functional short term energy fix, or a pick me up to keep you alert for a short

while, e.g. a late drive home. This functional perception has dramatically changed & with it the


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unique selling point of these energy drinks, to quote who is essentially the founder of the Industry,

Dietrich Mateschitz the Red Bull CEO, the U.S.P is now somewhat more philosophical:

What Red Bull stands for is that it gives you wings, which means that it provides

skills, abilities, power etc. to achieve whatever you want to. It is an invitation as well

as a request to be active, performance-oriented, alert, and to take challenges. When

you work or study, do your very best. When you do sports, go for your limits. When

you have fun or just relax, be aware of it and appreciate it.(Iezzi, 2012)

This is clearly far from its functional origins & aims to sell an extreme lifestyle, hence the prevalence

of extreme sports in the various brands advertising portfolios. The brands no longer aim to sell you a

liquid energy boost, but a piece of this wild & extreme lifestyle. This is why the various brands all try

to outdo each other in extreme sports sponsorships, because they must constantly push this

extreme image to stick out from the competition e.g. the Red Bull Stratos space jump.

2.5.3.SalesAs you can see from the figure below, the figures acquired from (PR Newswire, 2013) clearly show

that the vast majority of sales come from purchases in local shops. There is also significant amounts

of energy drinks purchased from mass merchandisers & warehouses, while not stipulated we believe

that many of these sales are to bars & nightclubs. This is due to the growing trend of mixing energy

drinks with spirits which is coming increasingly under scrutiny, due to a number of high profile

incidents (University of Michigan, 2013).

Figure 3 - Energy Drinks Sales Breakdown

59

11

13

2

10

5

Energy Drink Sales Breakdown

Convenience Stores

Other

Mass Merchandisers

Drug Stores

Supermarkets

Club Stores/Warehouses


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2.6.Key Drivers in the Energy Drinks MarketThere are a few key elements that can be drawn from a P.E.S.T.E.L Analysis (in Appendix II), firstly

the energy drink industry seems to have been very resistant to the financial downturn of 2008, as its

growth while slowed has continued strongly. New growth is expected to come from the BRICS, the

Middle East & Latin America in the medium term. There is growing Identity crises within the industry

as all the competitors have merely replicated Red Bulls extreme sports image & accentuated it. This

is making it increasingly more difficult to create an individual brand.

Politically & socially the industry is receiving negative media attention due to the high profile cases

where energy drinks have been linked to coronary deaths. This is resulting in political pressure to

limit the places where these drinks are available, placing sugar taxes to reduce their consumption &

protecting younger consumers from energy drink advertising. As a result of this & new healthy livingtrends amongst consumers many energy drinks companies have released sugar-free & low-carb

options. As a result the two main environmental pressures appear to be Social & Legal, the industry

itself for the time being is such a bull market it ignores the current economic environment. Socially it

is a rather mixed bag generating both opportunity in demand for new segmented health conscious

products, while then negatively affecting the industry with public criticism of its effects on coronary

issues. Technologically & environmentally speaking there seems to be little more pressure than any

other industry to be a large cause for concern.

3. Company Analysis of Red Bull3.1.An Introduction to Red Bull

Red Bull was founded in Austria in the mid-80s by Dietrich Mateschitz, Dietrich modified a

functional tonic he found on his travels in Asia to suit western tastes. Dietrich did this because he

wanted to create a drink, which not just quenched thirst but also had a functional benefit (Red Bull,

2013). It was with the foundation of Red Bull that Mateschitz not only created a company which now

has a turnover $4,235 million a year, but a whole new industry which is now worth $37 Billion

(Zenith International, 2012).Red Bull is a titan of the energy drink industry, one which it hasmanaged to create, dominate & grow into a lucrative new niche in the mineral drinks market right

under the nose of traditional industry powers such as Pepsi Co & Coca-Cola.

These companies have increasingly targeted the growing energy drinks market as their own markets

have begun to decline (Zmuda, 2014). The Red Bull brand itself is incredibly fascinating & is built

upon associating itself with a myriad of teamsevents & people, probably to the point that it is now

more recognised for its values than it is for its product. It is ranked the 49 thmost valuable brand in

the world according to (Eurobrand, 2014) ahead of other International brands such as Facebook,

Tesco & IKEA. This reflects the effort Red Bull put into brand building as it reinvests 30-40% of sales


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in marketing (Passport, 2013). This brand has not been built upon traditional marketing techniques,

but by embracing modern marketing techniques such as Ambush Marketing, Digital Marketing &

closely linked Team & Event Sponsorship from its very beginning. This makes Red Bull a common

topic of discussion by marketers & consumers alike.

3.2.The Aims, Objectives & ValuesThis section attempts to uncover the message that Red Bull conveys when marketing itself to the

masses, or more specifically to males aged 18-34. As previously quoted in the Industry Analysis,

Dietrich Mateschitz stated:

What Red Bull stands for is that it gives you wings, which means that it provides

skills, abilities, power etc. to achieve whatever you want to. It is an invitation as well

as a request to be active, performance-oriented, alert, and to take challenges. When

you work or study, do your very best. When you do sports, go for your limits. Whenyou have fun or just relax, be aware of it and appreciate it.(Iezzi, 2012)

From this statement we can draw the following conclusions, Red Bull associates itself with the idea

of Self-Actualisation that you must be all you can be &by consuming Red Bull you are one step

closer to this. Red Bull positions itself as the tool to help you scale mountains, it for this reason that

they associate themselves with people who treat these mountains or other extreme environments

as their playground, or bend the environment to their will. The company slogan reinforces this, Red

Bull gives you (the) wings, & so all you have to do is fly. It is clear form this that Red Bull values arebased on:

Awareness Mind Over Matter Risk Self-Actualisation Self-Motivation Success

3.3.Company MilestonesAs you can see from the below milestones, which were taken from the official site (Red Bull , 2014),

there is an increasing focus on building the brand through more mainstream sports such as F1 &

football, as opposed to the extreme sports Red Bull has traditionally associated with in the past. This

highlights a growing need to broaden the appeal of the product due to the number of competitors.

Also noticeable is the increasing use of success to mark milestones in the most recent milestones,

where in the past the company milestones were more focused on participation or event creation.


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Year

1987 Red Bull was Founded

1988

The company began its association with extreme sports, holding an extreme sports

marathon relay race, which combined mountain running, paragliding, kayaking &

mountain biking

1989 Red Bull began associating itself with athletes, the first being F1 driver Gerhard Berger

1992The widely known Red Bull gives you wingscartoons begin, the first featured Leonardo

da Vinci creating the masterpieceknown as Red Bull

Red Bull began its Flugtag event, which involves everyday people designing homemade

gliders which are then demonstrated to the public & judged on creativity, showmanship

& the distance flown

1994This was the first year that Red Bull began to sponsor international athletes in the form

of top windsurfers Bjorn Dunkerbeck & Robby NaishRed Bull began to air its advertisements outside Austria

1995Red Bull purchased a majority share in the F1 Sauber team & began a 10 year

partnership

1999Felix Baumgartner began his long relationship with Red Bull by completing the highest

recorded base jump off Petronas tower

2000 Red Bull is launched in the Middle-East

2001The Red Bull Junior team was established, which has since produced world champions

such as Sebastian Vettel2003 The Red Bull Air Races began

2005 Red Bull Racing was established after Red Bull purchased the Jaguar F1 team

2006 Red Bull Nascar established

2007 EC Red Bull Salzburg declared Hockey League champions

FC Red Bull Salzburg win the Austrian Football League

Red Bull Records established

2010 Red Bull New York FC moved into their new Stadium the Red Bull Arena

Red Bull Racing driver Sebastian Vettel wins his first World Championship

2012Felix Baumgartner jumps form the edge of space, breaking multiple records including the

first supersonic free-fall, the longest ever free-fall & the highest ever jump

Sebastian Loeb wins his 9thconsecutive WRC

2013 Sebastian Vettel & Red Bull Racing win their 4thconsecutive titles

Cyril Despres wins his 5thDakar Rally

Figure 4 - Company Milestones


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3.4.Red Bulls Product Range3.4.1.Products

Red Bull has a very limited product range especially in relation to its competitors. This is a very

serious problem due to the falling market share of original flavour energy drinks in the market. As a

result Red Bull released a limited edition range in the U.S this comprises of three new flavours

(Passport, 2013):

Red:Cranberry Silver: Lime Blue:Blueberry

These new products are still too new to be assessed for success though new product launches for

Red Bull have not went well in the past, such as the Red Bull Cola brand which was discontinued.Red

Bulls latest product, Red Bull Zero Calories, was first launched on to the market in France in 2013

and is set to reach the U.K market in summer 2014 (Morton, 2014). This product is aimed at themore health conscious consumers by offering an energy drink with no calories or sugar. This is Red

Bulls second healthconscious version after the launch of their sugar free product a decade ago. This

new product range helps Red Bull compete with main rivals Monster who also have introduced

health conscious options such as their lo-carbproduct.

Red Bull traditionally have used a slim-line 250 ml can size. However they have recently introduced a

new supersized 473ml can in an attempt to raise per capita consumption, which is low compared to

other caffeine drinks, the introduction also represents direct competition to its rivals MonsterEnergy whose standards can is 500 ml (Anon., 2014). Red Bull have come under criticism for the

volume of sugar contained within these supersized cans as they contain an excessive 13 teaspoons in

each can (Webb, 2012).

3.4.2.Product PositioningRed Bulls is considered the premium product on the energy drinks market & is priced accordingly.

The company uses the pricing to a psychological effect, which creates a belief in consumers that the

product is superior to its competitors (Magloff, 2014). It is for this reason partly, despite comparable

sales between Monster Energy & Red Bull, Red Bull has far superior revenues. This positioning has

been supported due to Red Bulls First Mover Advantage (FMA), being the founder of the market

Red Bull has built up the brand loyalty to maintain this pricing, even in the face of far cheaper

competition, an example of which we highlighted earlier is Coca-Colas Burn brand which is 40%

cheaper.

3.4.3.Target MarketRed Bull targets an 18-34 year old male segment of the market (Ackerman, 2013), they do attempt

to reach this market through the various extreme sports associations, the Red Bull Air Race, CliffDiving etc. However this market is incredibly saturated as all of the major brands target this segment


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using the same approach. As a results we see Red Bull more so than the other brands attempting to

broaden its appeal. They attempt to do this in a number of ways, firstly the younger generation are

more health conscious & are concerned with the health effects of energy drinks than the previous

generation (Radcliffe, n.d.). Secondly there is low consumption of energy drinks amongst women,

many of whom are more health conscious than men.

This has seen the introduction of sugar-free & zero calorie editions, this represents a rapidly growing

share of the market. It has also seen an increased effort to endorse role models to get around

legislation to reach minors before spending habits are set, though the company denies this, its a

constantly levied criticism (Montague-Jones, 2011). In an effort to strengthen its appeal to women

Red Bull has associated itself with a number of high profile sportspeople such as professional golfer

Alexis Thompson & Skier Lindsey Vonn.

3.4.4.Competitors/SubstitutesRed Bulls largest competitor has been stated throughout this document many times, Mo nster

Energy & Red Bull represent the lion share of the energy drinks market with approximately 80%

market share (Caffeine Informer, 2013). Monster Energy has a much more diversified product line

than Red Bull with a larger variety of flavours. Monster also offer a much larger can for the same

price as Red Bull in an attempt to represent a better value. While Red bull is trying to widen its scope

to attract new customers, Monster Energy however has an extremely narrow focus aggressively

targeting Red Bulls traditional market of 18-34 year old men, this is reflected in Monster Energys far

more masculine image. This strategy to their credit has worked incredibly well, as it only took 5 yearsfor Monster Energy to overtake Red Bull as the market leader In the U.S. (Bouckley, 2014).

3.4.5.Marketing MethodsAs weve stated Red Bull has an innovative marketing strategy which does have elements of

traditional (passive) marketing such as print & television advertisements, this is usually managed by

Red Bull House which amongst other responsibilities Issues the monthly Red Bulletin magazine.

However the majority of advertising involves modern (active) marketing techniques such as:

Digital Marketingo Blogso Viral Advertisementso Social Media

Team Ownership Event Organisation Ambush Marketing

Red Bull is a prime example of Ambush Marketing. Ambush marketing involves the investment of

time, energy, knowledge & creativity rather than money to achieve its aims (Entrepreneur, 2013).

This is something Red Bull have done fantastically in the past, quite early on they aimed to create


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brand buzz on the club scene, they did this by making sure local DJs were seen with the product &

as a result Red Bull became quite popular amongst clubbers, this technique is now known as

seeding(FDS, 2013). The company is very active social media & strives to use it to its full potential,

in fact it is so active on twitter that 49.3% of all energy drink related tweets mention Red Bull (News

Reputation, 2012).

Where Red Bull really excels is in team ownership & event organisation. But why are we using the

terms team ownership & event organisation instead of sponsorship, because Red Bull doesnt do

plain sponsorship very often. Traditionally sponsors will pay to have their logo associated with a

team to derive marketing value by association e.g. Adidas sponsoring the Olympics, this however can

be undermined by competitors ambush marketing campaigns such as Nike did in the 1996 Olympics.

In Red Bulls case they integrate the team or event into the company and intrinsically link their values

& branding so tightly they cannot be ambushed, for example the Red Bull Racing F1 is wholly owned

by Red Bull, it is called Red Bull in short, and the car bares its colours & logo. So if Monster Energy

want to associate themselves with the team it is near impossible because the branding is so

identifiable with the team.

This trend continues to their other teams EC Red Bull Salzburg, New York Red Bulls FC etc.

Competitors cannot even ambush the stadium as they are generally Renamed the Red Bull Arena or

some variation & decked out in the Red Bull logo & colours. The interesting aspect of these ventures

is that while in the short term Red Bull makes a significant investment, they also run these teams like

a business & turn over a profit relatively quickly. The same goes for Red Bull events, you see thesame re-occurring theme with Red Bull Flugtag, Cliff Diving etc. These events are all intrinsically

linked to the brand & prevent ambushing. Most of these events are re-occurring, & therefore enable

annual brand interaction with potential customers.


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4. Conclusion4.1.Industry Analysis

In conclusion the Energy Drink industry is clearly a profitable one. The success of Red Bull has

ultimately attracted many envious eyes, which have now entered the market looking for their share.

Especially those who have made significant profits from the now declining soft drink industry who

are looking to compensate for loses. The level of competition has increased risk for those in the

market with the largest share as they have the most to lose, this is due to the high substitutability of

products available.

The market is frequently becoming more & more segmented in terms of flavours, various sugar-free

& low-carb options. Companies are finding it difficult to create an individual image that can separate

them from their competitors. This is likely to change so companies can position themselves to target

groups such as women, who currently have a very low consumption rates in comparison to men.

Overall the industry should continue to grow sales due to very high sales growth from emerging

economies.

4.2.Company AnalysisIn being the first mover Red Bull has a distinct advantage, over the years it has developed strong

brand recognition & loyalty. It is however becoming a victim of its own success. The product is

positioned at a premium price & is easily substitutable, as a result there is a growing number of

competitors entering the market & undercutting Red Bull. This is leading to a slow erosion of itsmarket share, especially from Monster Energy who is now the market leader U.S. In the past the Red

Bull branding has always been distinctive due to its association with extreme sports such as

snowboarding & motocross, it is however losing this distinctive image as all the new entrants are

emulating this approach.

Whereas in the past Red Bulls appeal has always been to the 18-34 male segment, it now has to

look elsewhere due to the level of competition. This is where Red Bull can carve out a new

competitive advantage. In an effort to steal a slice of Red Bulls market share competitors areentering with increasingly more masculine extreme images. As a result Red Bulls image is now quite

softin comparison to its competitors. As a result of its competitors narrow focus Red Bull has the

most potential to widen its focus outside of this segment, while still being capable of competing in

its current market.


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Appendices

Appendix IP.E.S.T.E.L of the Energy Drinks Market

Political

Politically the energy drinks industry is under scrutiny due to incidents where Red Bull or otherenergy drink consumption has led to deaths usually in conjunction with alcohol consumption. While

these deaths are few & far between, they have still received significant media attention. By

extension, the shock of rare cases, such as these have caused many legislators to react who are now

beginning to look at restricting its sale (Nestle, 2013). As most of the political matters that affect Red

Bull are based on restrictive legislation, we shall talk about this in the Legal section.

Economic

Economically the energy drinks industry has continued expanding at a double figure rate for the lastdecade, this growth has largely been unaffected by the downturn & has outperformed other

comparable industries. This is quite a testament to the growing popularity of energy drinks

especially as they tend to be far more expensive than substitutes such as coffee & mineral. The

interesting thing is you would expect the opposite to be true due to declining personal expenditure

worldwide due to the 2008 financial crash. The fact is worldwide figures are masking the slowing

down of sales in mature economies which are now below the 10% mark, though these growth

figures are still quite high the true growth now lies in the BRICS(especially in South Africa) & the

Middle-east.

Social

Energy drinks companies are very active on social media sites such as Twitter & Facebook, Red Bull

in particular as it is mentioned in nearly half of all energy drink related tweets. Socially the energy

drinks brands are seen as cool due to the extreme sports image & team sponsorships. This cool

image has helped companies such as Red Bull become quite popular with clubbers, students &

drivers. Energy drinks however receive a lot of criticism via new digital media such as blogs,

especially in relation to deaths that were caused by excessive energy drink consumption in

combination with spirits. Consumption of alcohol together with energy drinks is quite popular

amongst students & clubbers due to the energy boost, as a result this has a double edged sword forenergy drinks companies. Energy drinks companies are also being swept up in the general wellness

trend which has existed for the past few years, & has resulted in the release of low carb & sugar free

options.

Technological

In terms of technological forces effecting the environment these are mainly limited to improved

manufacturing & transport capability. Innovation in this industry tends to come from product

segmentation. The most important Technological factor in the Energy Drinks Industry is the Internet.

This invention has allowed people across the world interact with the brands from the comfort of


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their home, whether it is viral advertisements to create buzz such as the Red Bull Stratus event

which had the largest live audience on YouTube ever or merely interacting with their social media

page.

Environmental

While this could have come under the social section, we decided to keep this separate to highlightits importance to the modern consumer. While there is certain pollutions cause by the

manufacturing of energy drinks the Industry is very focused on package recycling. The most common

form of packaging is the aluminium can which is 100% recyclable. Some of the cheapest brands do

use plastic packaging for their larger products such as 1 litre bottles but these again are recyclable &

are a relatively small percentage of sales.

Legal

Legally we are seeing increasing measures being taken against all unhealthy products such as softdrinks, especially in relation to advertising at children. Energy drinks in particular are taking a lot of

flak from political establishments which are looking to limit their point of sale. This is down to two

reasons rising obesity amongst children & adults, & also the high profile deaths linked with energy

drink consumption. While not illegal regulators are looking at ideas such as sugar taxes to help

reduce consumption of these products. There is also restrictions being placed on advertising at

children, who are a prime target for companies looking to become recognised by consumers before

spending habits are set.

Appendix IIS.W.O.T

Strengths

Market Leader

As market leader Red Bull has a strong brand image & the word Red Bull has become

interchangeable with energy drinks in some countries much like Hoover did with Vacuum Cleaners.

This highlights how powerful the brand is.

Broad Market PresenceRed Bull, as previously stated is available in over 166 countries worldwide this will provide stable

growth into the future even as current markets mature.

First Mover Advantage

As the first entrant into the market Red Bull has built up very strong brand loyalty as a result.


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Weaknesses

Limited Range

Red Bull has moved to rectify this buy releasing its limited Red, Silver & Blue flavours in 2013 but its

success remains to be seen if it performs in relation to its competitors multi-flavoured lines.

Social Stigma

As Red Bull as a word is used interchangeably with energy drinks, when negative reports arise in

relation to energy drinks, Red Bull itself tends to take most of the media flak rather than

competitors.

Opportunities

Emerging Markets

Red Bulls wide market presence represents major opportunities in growing economies such as the

BRICS, but also regionally such as the Middle-East & Latin America where sales growth is

exceptionally high despite its premium pricing in non-high-income countries

New Production Facilities

Red Bull has positioned new manufacturing facilities across the world to meet regional demand with

this investment in place, Red Bull clearly has an advantage over its competitors.

Less Masculine Image

As we talked about in the main body of the report Red Bull has a somewhat less masculine image

than its competitors, this may enable Red Bull to make inward progress into the female market

segment where energy drinks have traditionally not fared well with relatively little competition.

Low Consumption Rates

Red Bull is most famous for its slim-line can, but there is a growing trend towards larger cans to take

advantage of the low per capita consumption rate of energy drink consumers, versus that of softdrinks or coffee. This represents a strong potential area of growth as users are already familiar with

the brand.

Threats

Competition

As Stated there is major growth potential in the BRICS, though Red Bulls premium product will face

stiff competition in these new markets from low cost brands such as Coca-Colas Burn. Especially as

it may utilise Coca-Colas existing distribution network.


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Large marketing costs

As we discussed earlier Red Bull reinvests 30-40% of its sales back into marketing, this is an

extremely large percentage of Revenue. But this may come down as it enters weaker economies as

High OECD economies usually have far higher marketing costs than those outside. It alsodemonstrates the level of competition for brand recognition to warrant such expenditure.

Image Replication

As we discussed earlier all new entrants tend to enter the energy drinks market with a more

exaggerated Red Bull extreme sports image, this in turn is making it increasingly harder to

distinguish between the various brand messages.

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