Red Bull GmbH

International Directory of Company Histories, Volume 60 (1989) by Frederick C. Ingram

Red Bull GmbH

Brunn 115 A-5330 Fuschl am See Austria Telephone: ( 43) 662 65 82-0 Fax: ( 43) 662 65 82-31 Web site: http://www.redbull.at

Private Company Incorporated: 1984 as Red Bull GmbH Employees: 1500 Sales: EUR 1.15 billion ($1.32 billion) (2002) NAIC: 312111 Soft Drink Manufacturing

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 of the world market for energy drinks, or functional beverages, a category it was largely responsible for building. Its dominant position in the fastestgrowing segment of the soft drink market in a number of countries has drawn a number of imitators. Red Bull has become a case study in successful guerilla marketing in the United States and United Kingdom. Marketing is aimed at hip young people with active lifestyles, though the formula began as a popular tonic for blue collar workers in Thailand.

Globetrotting Origins

Dietrich Mateschitz was born in 1946, a native of the Styria (Steiermark) region of Austria. As a student in Vienna, he studied world trade and commerce. After graduating, he worked for Unilever, then Blendax, a German manufacturer of toothpaste. This position involved much global travel.

In 1982, Mateschitz visited Thailand and brought home with him a number of energy drinks he sampled there. According to The Economist, Mateschitz was sold on a product called Krating Daeng after it took away his jet lag. He later claimed to consume up to eight of the drinks a day.

Krating Daeng, which is Thai for "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., founded in Thailand in 1962 by Chaleo Yoovidhya, a Blendax licensee. (T.C. Pharmaceutical eventually formed the subsidiary Red Bull Beverage Co. Ltd.)

Mateschitz founded 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 formula was altered for Western palates. Some ingredients were dropped and carbonation was added. Components of the legendary elixir included B vitamins, glucuronolactone, sodium, and caffeine. One ingredient, the amino acid taurine, was derived synthetically, not from bull testicles, as rumor had it. Red Bull's selling proposition was that it increased stamina and mental concentration, making it a natural for one of the original target users, long-distance drivers. The taste of the thick yellow beverage, said to be akin to liquid gummi bears, lent added distinction to the brand.

International Expansion in the 1990s

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 of the sports drink market there, reported the Associated Press, putting it ahead of Gatorade. It was priced about three times as much as a can of Coca-Cola. Red Bull was introduced in the United Kingdom in 1994 and marketed there as Red Bull Stimulation after 1996.

Red Bull entered the United States in 1997, focusing at first on four western states: California, 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 for $2 a pop.

Red Bull associated itself with the nascent extreme sports movement. The company sponsored snowboarding and freeskiing contests and Flugtag, a homemade flying machine challenge (Mateschitz was an enthusiastic collector of vintage aircraft).

While Red Bull had appealed to athletes and, in the United States, tired white collar workers, the real story of Red Bull's growth lay in the promise of further endurance at clubbing, giving it a special appeal for young people exhausted from working hard all week. The Los Angeles Times reported that the beverage appeared to glow green under the fluorescent light of 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 for 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 of 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 Glaxo-SmithKline).

The company promoted the lift the beverage offered with the slogan "Red Bull gives you wings." Traditional advertising was limited, as the company focused heavily on getting product samples into the right hands. The company sometimes put up edgy, graffiti-style billboards. In the late 1990s, Red Bull produced animated TV ads for mature markets.