Summary
In this podcast, we are learning about the history of Red Bull initially, hearing where it comes from and how it got its roots established in the market. Originally, Red Bull came from Thailand where it was marketed as an energy booster. When a European businessman was there on a business trip, a cab driver noticed he was tired and offered to make a stop to pick him up the drink – originally called Krating Daeng. After drinking it, he noticed that the ingredients caused him to gain a burst of energy and was intrigued. He later met with the creator of Krating Daeng and proposed an expansionary policy to him. After receiving an agreement, he tried to have his friend brand it and come up with a slogan, but was unable to sell it anywhere but Austria initially. On top of this, in the initial consumer test panel, it failed miserably due to its sickeningly sweet flavor and over the top premium price, with consumers stating that they couldn’t even be paid to drink it again.By marketing the product using exciting events, he was able to successfully capture the marketplace’s eye. By linking extreme sports to the energy drink, he was able to successfully imprint his brand into the consumers’ eyes. By generating revenue in this way, Red Bull was eventually able to launch their own advertising campaign in which they rebranded historical figures using their product. The residual problem though is that the drink still hadn’t been approved for sale in other countries due to its unique combination of ingredients. Despite this, it was still being actively traded in countries in which it wasn’t legal yet through under-the-counter procedures and don’t ask don’t tell policies.Once the demand reached a breaking point, Germany approved it for demand, but this created a problem. The company no longer has enough production capacity to keep up with demand.This creates a shortage, and in addition to this there are now competitors. After this shortage, Red Bull is no longer the leader in the market.After failing to break into the UK market, they rebrand the drink again, attempting to reach a new market in the club scene by using it as a mixer with alcoholic drinks, allowing them to party longer. With the UK finally invested in the drink, it now makes its way to the west.
In America, Hansen Beverages is working hard to bring their company up from the ground after nearly avoiding bankruptcy. By bringing in an outsider marketer and enabling him to create his own beverages, they are able to gain some success.They begin by creating a direct competitor to Red Bull in the US before Red Bull makes it to market. Initially, Red Bull is trying to market itself in the US in the same way that it did in the UK – by using the party scene, but vicious rumors begin cycling about the drink, leaving some consumers skeptical about its safety and consumability as well as its sales numbers.In April of ‘97, a drink called Hansen’s Energy hits the market, but as Red Bull takes over, Hansen’s Energy collapses quickly. In San Francisco, a new energy drink is being sold branded “Rockstar”. Instead of the 8oz cans used by other energy drinks, Rockstar is a 16oz can for the same price. The marketing takes off and within a year the company has made a sizable profit.It quickly takes the number 2 spot in the energy drink market, crushing Hansen Energy quickly. In a business meeting, the developers of Hansen Energy decide that their branding isn’t working and they need to do something quickly or their company will collapse so they decide to take a more aggressive approach. By branding their drink as mean, aggressive, and moody, they’re able to capture the market’s eye and sell their drink successfully to markets and bars. Hall, with Hansen Beverages, heads to the X-Games in order to get extreme athletes to back their energy drink, Monster. By taking the same approach as Red Bull and sponsoring action sports athletes, they are able to gain the exposure they need.By 2005, Monster replaced Rockstar in the number 2 spot. With a good partnership through Anheuser Busch, Monster is able to diversify their brand and get better distribution globally, allowing them to grow even faster. In 2008, Monster took over the number one spot in the market. This creates even more conflict.
With new competitors popping up everywhere, new ideas are coming out all over the place. A new drink, 5-Hour Energy enters the market with a new sales model. A shot-sized drink that gives the same boost without the need to be chilled and also in a smaller package. This new drink creates problems for both Monster and Red Bull, further splitting the market. As this new drink comes out, however, a new problem arises – health problems with all of the drinks.A string of unexpected deaths and lawsuits leads to consumer skepticism around the drinks, and sales drop for all of them.Through a selective partnership with WalMart, 5-Hour Energy maintains its success.Red Bull maintains its success through its action-packed marketing, but disaster strikes when Monster gains publicity for being dangerous.After a heart attack caused from Monster Energy, a family sues Monster Energy.The publicity causes the entire energy drink industry to be put under scrutiny, and their sales suffer as a result.Due to their marketing strategies, the energy drinks are forced to rethink their business plans, and this gives us what we have with the energy drink industry today.
