Red Bull Gmbh in Soft Drinks (World)

RED BULL GMBH IN SOFT DRINKS (WORLD)

April 2013 SCOPE OF THE REPORT Scope

. This global profile focuses on the industry trends in soft drinks. Disclaimer Much of the information in this . All values expressed in this report are retail/off-trade in US dollar terms using a briefing is of a statistical nature and, fixed exchange rate (2012). while every attempt has been made to ensure accuracy and reliability, . 2012 figures are based on part-year estimates. Euromonitor International cannot be held responsible for omissions or . All forecast data are expressed in constant terms; inflationary effects are errors. discounted. Conversely, all historical data are expressed in current terms; Figures in tables and analyses are calculated from unrounded data and inflationary effects are taken into account. may not sum. Analyses found in the briefings may not totally reflect the SOFT DRINKS companies’ opinions, reader discretion is advised. OFF-TRADE RTD VOLUME 534.8 billion litres While Red Bull remains the Bottled Water world leader in energy drinks, it 192 billion litres is facing growing competition from other players. TCCC in Sports and Fruit/Vegetable Bottled particular, with Monster in the Carbonates Sports and Energy DrinksEnergy US and Burn in Brazil, is also Juice Water 169.5 15 billion litresDrinks posing an increasing threat. 62.0 billion 205.1 billion These two markets are emerging billion litres 16.2 billion litres litres Concentrates as energy drinks battlegrounds litres and the implications are 43 billion litres considerable for Red Bull’s ability to remain the number one Concentrates RTD Tea RTD Coffee ranked player. 43.7 billion 30.1 billion 4.5 billion litres litres litres

© Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 2 STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS STRATEGIC EVALUATION Red Bull a pioneer in its category

. The privately-owned Austrian Red Bull GmbH company Red Bull’s core business is energy drinks. Dietrich Mateschitz Headquarters: Fuschl am See, Austria and Chaleo Yoovidhya each owned a Regional involvement: Global 49% stake prior to 2012 when Mr Carbonates, sports and Yoovidhya passed away. Mr Category involvement: energy drinks Yoovidhya’s son Chalerm holds the World soft drinks share by off-trade remaining 2%. While Mr Yoovidhya 0.2% RTD volume (2012): was alive he acted as a silent World soft drinks off-trade RTD volume partner. 12.4% growth (2011-2012): . Red Bull has created the global market for energy drinks, and the pioneering Red Bull brand has became synonymous with energy drinks for a large number of consumers. Red Bull remains bullish and ambitious in their corporate brand. Despite rising competition, Red Bull continues to comfortably lead the global energy drinks market in both volume and value terms. However, the threat from The Coca- Cola Co (TCCC) has been mounting.

. Red Bull operates many other businesses aside from energy drinks The company owns and manages a construction company, football clubs, youth academies and TV broadcasting and recently online clothing (Red Bull label only) sales. . Additional media products include print magazines about football, motor racing, celebrity gossip and lifestyle. The company has even ventured into the mobile phone service business in Austria, Hungary, Switzerland and South Africa. . As a privately-held company, financial information is limited however the company reported . Red Bull reported exceptionally strong net sales growth in South net sales of €4.9 billion in 2012 Africa (+52%), Japan (+51%), Saudi Arabia (+38%), France (+21%), and 5.2 billion cans sold, the US (+17%) and Germany (+14%). Red Bull cited efficient cost representing growth of 15.9% management and ongoing brand investment as underpinning its and 12.8%, respectively. growing profitability.

STRENGTHS WEAKNESSES Category leader Broad geographic Category limitations Controversial presence . Red Bull has . Red Bull has a broad . In overall soft drinks, . The relatively high established a strong, geographic presence, Red Bull has a limited caffeine content of Red consistent brand image which should ensure product portfolio Bull makes the brand (an independent, edgy positive long-term compared to the rising highly vulnerable to brand) globally. Red Bull growth even if certain number of rivals with a regulatory control. is synonymous with markets reach maturity. plethora of flavour energy drinks in many variants and categories. countries.

OPPORTUNITIES THREATS Emerging markets New production Competition High marketing costs

. Emerging markets . Red Bull is building a new . Monster represents the . Market maturity in represent newer production facility in Brazil biggest threat to Red developed markets will geographies for Red which is likely to make its Bull as it contains make marketing to its Bull’s expansion. retail price more natural ingredients, core consumers harder Accelerating the competitive than imported which seem more than in the past. marketing and product prices. Building a desirable than Red Bull Constant communication sponsorships in these site in Asia should also be for some consumers. with consumers means markets is a wise move. considered. high marketing costs.

It is not easy at the top Red Bull stands up to health regulators

. Red Bull’s success has attracted considerable . While health officials continue to voice concerns interest from soft drinks multinationals, TCCC and over energy drinks and the category remains under PepsiCo. TCCC in particular has been successful threat from stronger regulation, energy drinks has at leveraging its distribution network to launch seen relatively little impact in terms of sales. To Burn across many markets and to back Monster. some extent this has added to the category’s Burn is a major threat to Red Bull in Brazil while in “edginess” attracting young consumers and the US Monster has overtaken Red Bull in off- generating consumer interest. There is little risk of trade volume sales terms. Red Bull will need to Red Bull reformulating its product to cater to health find ways to hold onto its number one ranking concerns and instead the company insists that its globally in energy drinks and stave off this competition. products do not pose a health risk. Will premium work in emerging markets? Red Bull breaks with tradition in 2013

. Red Bull has consistently maintained its premium . In 2013, Red Bull, for the first time in 15 years positioning from its slimline metal cans to its price added new products to its energy drinks range. differential versus brands such as Monster. While Edition is a range of three new flavours and thus this strategy has reaped dividends in the mature far available only in the US market. The likelihood markets, it remains to be seen if it will sustain however is that this range will be rolled out to other growth in the emerging markets. Brazil with its markets. The move is a response to growing large population of lower-income consumers may competition. Success for this launch will be crucial pose a challenge giving cheaper brands such as to the company’s growth prospects in the mature TCCC’s Burn a competitive advantage. markets.

© Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 7 STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS COMPETITIVE POSITIONING Red Bull performance wanes towards end of review period

. Red Bull underperformed the overall energy drinks market in 2011-2012. While the company’s market share of the energy drinks market in the US increased in 2012, the market’s growth rate overall began to wane. Red Bull remains heavily dependent on the US for its global growth. Weakness here is reflected in the company’s weakening global performance in volume terms. The company however continues to enjoy the position of number one ranked player in energy drinks globally with a 21.4% market share. . In terms of absolute volume growth however, the US remained Red Bull’s key growth engine in 2011-2012 reflecting growth of 96% over 2007-2012. Brazil came second in terms of absolute volume growth expanding by 608% over the review period or 48% CAGR. This market was a particular focus for Red Bull with the company sponsoring various sporting events in order to raise the brand’s profile.

. In value terms, the company’s performance was stronger in recent years although even in value terms the company’s performance fell below that of the energy drinks market overall. The energy drinks market has attracted a number of other players including Monster Beverage Co, and The Coca-Cola Co (TCCC) which marketed it own brands in the category including Burn as well as engaging in a distribution alliance with Monster Beverage Co. PepsiCo had a modest presence in energy drinks with its brand Sting; however like TCCC it maintained its own alliance, with Rockstar Inc. . Red Bull’s sister brand non-carbonated Red Bull remains owned by TC Pharmaceutical which led the energy drinks category in China and was present in Thailand where it ranked second. TCCC’s Burn was a stronger performer in Latin America over the review period, though Red Bull continued to lead the category.

Soft Drinks: Global Top 10 Companies by Off-Trade RTD . The only significant movement in rankings to

Volume, Rank 2007-2012 and 2012 Share have taken place over 2007-2012 was the

split by Kraft into two separately traded % company

Company entities, which pushed Mondelez into the top

2011

2008 2009 2010 2012 2007 share 2012 five based on its strong presence in Coca-Cola Co, 1 1 1 1 1 1 21.2 concentrates. In market share terms, TCCC The maintained a large gap between itself and PepsiCo Inc 2 2 2 2 2 2 9.9 PepsiCo. Indeed, the gap between the two Danone, Groupe 3 3 3 3 3 3 4.7 widened slightly over the review period. Nestlé SA 4 4 4 4 4 4 3.7 PepsiCo’s recent focus has been on the development of its snacks business and on Mondelez - - - - - 5 2.0 International, Inc developing a “better for you” range of packaged foods, hence possibly neglecting Ting Hsin its soft drinks business. International 7 7 7 6 6 6 1.6 Group . TCCC has been active throughout the review Dr Pepper period moving beyond its core carbonates - 6 6 7 7 7 1.5 Snapple Group Inc base to fruit/vegetable juice, RTD tea, bottled water and sports/energy drinks. Anheuser-Busch - 33 31 30 29 27 0.2 InBev NV . Red Bull as a premium player ranked much farther down in RTD volume terms. The Red Bull GmbH 48 41 40 37 34 28 0.2 brand is also heavily reliant on the impulse Otsuka Holdings - 32 33 32 32 29 0.2 rather than grocery channel thereby Co Ltd discouraging multi-pack sizes.

Soft Drinks: Global Top 10 Companies by Off-Trade Value, . Danone’s volume share is significantly

Rank 2007-2012 and 2012 Share higher than its value share, due to its large

volume sales of low-priced bottled water in % company

Company emerging markets, notably Aqua (Asia

2011

2008 2009 2010 2012 2007 share 2012 Pacific) and Bonafont (Latin America). Coca-Cola Co, The 1 1 1 1 1 1 26.2 Meanwhile, Mondelez does not rank among the top 10 in value terms due to its PepsiCo Inc 2 2 2 2 2 2 11.3 reliance on the low-priced concentrates Nestlé SA 3 3 3 3 3 3 2.8 category in RTD volume terms. Suntory Holdings Ltd 6 6 4 4 4 4 2.7 . Red Bull GmbH however with its relatively premium but small serving size Red Bull Dr Pepper Snapple - 5 5 5 5 5 2.0 brand ranks seventh in 2012. The Group Inc company’s narrow focus in soft drinks, Danone, Groupe 5 4 6 6 6 6 1.9 being almost exclusively based on energy drinks, continues to keep the company out Red Bull GmbH 7 7 7 7 7 7 1.6 of the top five in soft drinks. Asahi Group Holdings 10 10 . TCCC and PepsiCo capture a stronger - - 8 8 1.5 Ltd 6 6 share in value than in volume terms chiefly Kirin Holdings Co Ltd 8 8 8 8 9 9 1.4 due to their products, particularly carbonates, being priced higher than local Ting Hsin International 16 13 12 10 10 10 1.2 brands and private label, benefiting from Group strong brand equity and extensive distribution networks.

© Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 12 STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS MARKET ASSESSMENT North America will continue to drive sales in energy drinks

. North America will continue to lead energy drinks in absolute volume growth terms over the forecast period. However, its CAGR of 8.1% over 2012-2017 represents a moderation from the 11.4% CAGR seen over 2007-2012. The Monster brand has led the market in the US over the review period in terms of absolute volume growth. Rockstar, due in large part to its alliance with PepsiCo, has also seen strong growth in this market. . Red Bull entered China in 2011, however Asia Pacific remains the company’s weakest region in terms of market share. However, this region will be exceeded only by North America in terms of absolute off-trade volume growth over 2012-2017 which may raise some concerns for Red Bull. After a period of strong market share gains in this region between 2007-2010 its performance began to moderate. TC Pharmaceutical with its non-carbonated version of Red Bull is the regional leader. Despite the close relationship between Red Bull GmbH and TC Pharmaceutical with the latter having been founded by the late Chaleo Yoovidhya, the companies remain separate entities.

. In value terms, both Latin America and Asia Pacific gained in importance for Red Bull over the review period. Latin American sales represented 12% of global value sales in 2012 while Asia Pacific made up 8%. In terms of growth prospects, the strongest growth will take place in North America where the market for energy drinks will expand by US$4.1 billion over 2012-2017. In CAGR terms however, the strongest performance will take place in Latin America which will see a 20% CAGR. . Red Bull is ranked number one in both markets. In Latin America, its market share remains a healthy 49.7%, however this represents a decline over 2007-2012 as the company faced strong competition from TCCC whose share has risen from 2.5% in 2007 to 14.9% in 2012. . Growth in both Eastern and Western Europe will be a comparatively modest at 5% and 5.1% CAGRs, respectively. However, these exceed the CAGRs for soft drinks overall in these regions, which will be only 2.7% and 0.5%, respectively.

© Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 15 STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS CATEGORY AND GEOGRAPHIC OPPORTUNITIES Leading players in energy drinks by off-trade volume and value

. The rankings of the leading players in energy . The Lucozade brand has faced strong competition in drinks vary significantly by volume and value. Red its domestic UK market from Red Bull. In 2012, GSK Bull commands a stronger market share in value announced a strategic review of the Lucozade and than in volume terms reflecting its relatively high Ribena brands, which may lead to possible price points and reliance on the mature markets, divestment. particularly the US, for its sales. The company . Red Bull has been constrained to some extent in however maintained is leading position by both volume terms by its highly concentrated production measures in 2012 although in both cases it has infrastructure. Up to 2012, the company produced seen its market share plateau over 2007-2012. exclusively in Austria leading to high shipping and . The major winner over the review period was production costs, which opened up the emerging Monster Beverage Co, which until 2012 was known markets in particular to less expensive energy drinks as Hansen Natural Corp. Underpinned by its brands. In 2012, the company announced plans to distribution agreement with TCCC the brand has build its first factory abroad in Brazil which may help made rapid gains in both value and volume terms. improve its competitiveness. The brand’s success has been driven by its North . Rockstar’s distribution agreement with PepsiCo did American performance where it generated 90% of not bring in the same share gains as the Monster its volume sales in 2012. and TCCC alliance. Rockstar made few share gains . In contrast GlaxoSmithKline (GSK) and its globally, with sales mainly coming from developed Lucozade brand have been losing market share. In Western markets where Red Bull continues to lead. volume terms, GSK has lost 2.4 percentage points PepsiCo may have found it hard to drive Rockstar in market share over 2007-2012. sales in these mature markets in the face of TCCC’s penetration and Red Bull’s dominance.

. While the US will lead growth in energy drinks in . The UK ranks among the top five most dynamic both volume and value terms over 2012-2017 there markets in both volume and value terms. While are clear differences among the top 10 rankings by Lucozade remains the leader here, its fortunes both measures. have waned. Red Bull was responsible for much of . China will push ahead of Brazil in volume growth Lucozade’s market share loss in the early part of terms. The market for energy drinks in China is the review period. However, later in the review more mature than in Brazil. Unit price growth in period, smaller brands are increasing Brazil will as a consequence be higher than that in fragmentation. The UK is becoming increasingly China allowing it to take second position in terms of fragmented as newer and smaller players have value sales growth. In China, Red Bull’s sister entered the market. company TC Pharmaceutical with its Red Bull is . In 2013, Red Bull launched three new flavour the overwhelming category leader with a market variants in the US market. This marks the first share of 81.2% in off-trade volume terms in 2012. major launch for the brand in the energy drinks . Markets entering the top 10 in volume terms category over the review period. The new range include the Philippines and Vietnam both relatively called Edition includes cranberry-, blueberry- and price-sensitive markets. Per capita consumption lime- flavoured variants packaged in red, blue and however in both markets is higher than the global silver cans, respectively. The move may help to average. Energy drinks in many Asian markets invigorate consumer interest in key markets such have a long history of being consumed by truck as the UK and the US where the range of energy drivers and labourers as a temporary energy boost. drinks options has increased considerably. It is These products were in fact the original inspiration recommended that the range be rolled out to other for Red Bull; a Westernised version of the potent markets where market share has weakened. drinks sold through by Thai pharmacists.

Monster pulls ahead in volume sales Threat from consumer health

. The Monster brand pulled ahead of Red Bull in the . Both Monster and Red Bull have also been US energy drinks market in 2009 in volume sales challenged by the 5-Hour Energy brand from Living terms but remains second to Red Bull in value Essentials, included in Euromonitor International’s terms. Monster has achieved wider presence in Consumer Health database as a tonic and bottled supermarket and forecourt retailers. TCCC has nutritive drink. This product has been heavily leveraged its strong distribution network through marketed on US television and offers a small pack both channels thus giving Monster an edge in size (57ml) and the benefit of being sugar-free. terms of volume sales. While Monster is targeted primarily at younger . The Monster brand has also been supported by male consumers, 5-Hour Energy is positioning sponsorship of high-adrenaline sports such as itself as a pick-me-up for office workers and MotoGP, NASCAR and Freestyle Motocross which working mothers. is a direct challenge to Red Bull, which also relies . The addition of new flavours in 2013 will help to on sponsorship of these sorts of events to maintain reignite consumer interest. Red Bull’s success in consumer interest. Another reason behind the the US has been due in part to its success in the disparity has been the fact that Red Bull sells on-trade which has helped to introduce the brand primarily in smaller 8.3oz cans, whereas Monster is into the off-trade. Educating consumers about how sold in larger 16oz cans at a relatively cheaper the new flavours can be mixed with alcoholic drinks price. Red Bull has since begun to offer its product in the on-trade should form part the marketing in a wider variety of sizes and in 2012 trumped campaign to launch the brand. Monster with Red Bull Stratos, sponsoring Felix Baumgartner’s free-fall from over 128,000 feet.

TCCC pushes Burn Localisation of production will help Red Bull

. Strong growth in the Brazilian energy drinks . Localising production in such a key market is a market has attracted a wider number of players, wise move for Red Bull. It also gives the company many of whom have focused on the emergent C stronger capacity more widely in Latin America socioeconomic class, launching energy drinks at where the markets for energy drinks in Colombia lower prices in 1-litre PET bottles. Examples and Mexico are also set to see strong growth. include BadBoy Power Drink from Horizonte and While Red Bull’s number one position remains safe Orbit from Bebidas Chiamulera. These moves have for the time being, reducing the price premium with helped to fuel growth overall in the category. TCCC is recommended. This will be supported by . TCCC has made significant gains in the market significantly reducing costs associated with with its Burn brand investing significant resources importing the product from Austria. in marketing. Like Red Bull, TCCC has targeted . The entry of Anheuser-Busch InBev NV was a key high-adrenaline sporting activities, announcing in development in the market in 2011. By 2012, the 2012 its sponsorship of Kimi Raikkonen’s Lotus F1 Fusion brand had managed to capture 0.2% of team. The brand competes directly with Red Bull, sales in off-trade volume terms which, while packaged similarly in a slimline metal can. Its price modest compared to the Red Bull brand at 19.8%, points however are typically lower than those of indicates strong potential for further growth. Red Bull giving it a stronger presence among Marketing initiatives centred around the popular lower-income groups. Big Brother Brazil TV programme in 2012 helped to . In 2012, Red Bull announced plans to begin increase awareness of the brand among young producing its energy drinks locally. people.

. The relative weakness of Red Bull from Red Bull GmbH in Asia Pacific is due in part to the strength of sister brand Red Bull from TC Pharmaceutical. A more cohesive international strategy should be developed by both companies. . The strongest prospects for the two players is in China, however opportunities are also being missed in markets such as the Philippines, Thailand and Indonesia. TC Pharmaceutical sales here in energy drinks have been virtually flat over the review period, as newer, more dynamic brands such as Cobra from Asia Brewery and Sting from PepsiCo in the Philippines have invested heavily in marketing and advertising. . A decisive entry for Red Bull GmbH in key Asian markets will be complicated by the presence of TC Pharmaceutical’s Red Bull. However, both companies could benefit from working more closely together including on the production side to reduce costs and widen their distribution network. The sudden death of TC Pharmaceutical founder Chaleo Yoovidhya in 2012 may present a challenge however in ongoing collaboration.

© Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 25 STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS BRAND STRATEGY Red Bull’s premium focus will result in pressure on market share

. Red Bull’s sales in 2012 remained dominated by the US market. In most of its major markets the company has managed to retain its number one position in volume terms despite strong competition from newer entrants. The US is an exception where Monster owing to the strength of its alliance with TCCC combined with an aggressive marketing campaign has managed to topple Red Bull from first place. . In value terms however, the company’s premium positioning has meant its ranking has remained more secure. As the dynamics of forecast demand shift to emerging markets, where consumers remain more price sensitive, this premium focus will result in growing pressure on Red Bull’s market share. TCCC and PepsiCo have emerged as the company’s strongest competition whether indirectly through distribution agreements such as TCCC/ Monster and PepsiCo/Rockstar and through their own directly owned brands such as Burn and Sting, respectively

. Event and sports sponsorship have been key elements for Red Bull’s marketing strategy for many years. Red Bull’s eponymous brand has achieved remarkable global success and 30-40% of its sales are re-invested back in marketing and promotional activity. Red Bull’s strategy has historically been a 3-pronged approach incorporating buzz marketing, sponsorship and TV advertising. Buzz marketing, including handing out free samples at campuses and events where under 30s gather, is often used as a way of initially raising consumer awareness when entering new markets. . In 2012, the company took its marketing literally to an entirely new level with the Stratos campaign which featured Felix Baumgartner in a record- breaking 128,000 feet jump from the earth’s stratosphere, making him the first man to break the speed of sound while in freefall. The event was streamed live on line with viewers able to log in to post comments via Twitter and Facebook. Motorsports is another key focus for the company with its own very successful F1 racing team.

. In a bid to stave off competition from rival brands, Red Bull launched the Red Bull Edition range in 2013 in select city markets in the US. The launch will likely be followed by a nationwide roll-out later in the year. Despite pressure from other energy drinks brands many of which have launched additional flavours Red Bull has stayed loyal to its original formulation and packaging. . The launch of cranberry, blueberry and lime Red Bull variants is a major direction change for the brand, being its first major launch over the review period. In order to differentiate between Red Bull Edition and the original Red Bull the new cans received a facelift with the addition of new colours and a new bull design. . Red Bull has not as aggressively as other brands launched into new packaging formats, remaining almost exclusively with slimline metal cans. It has however in some mature markets such as the UK launched into 1-litre PET bottles. This reluctance is in part due to the company’s strategy of retaining its premium positioning.

© Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 29 STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS OPERATIONS Expanded corporate operations

Red Bull GmbH

Red Bull Soft Drinks Other Businesses

Motor Racing, Media, Red Bull Energy Drinks MVNO, Fashion Online Retailing

Red Bull Simply Cola, Carpe Diem

. Red Bull is diversifying into other businesses, rather than limiting itself to energy drinks. In recent years, it has been branching out and became a media company in its own right. The participation in sports sponsorships and events connects the company with a global brand that has passion and excitement associated with it. The company is also present in RTD tea and bottled water with the Carpe Diem brand which it launched to target the health and wellness trend in soft drinks. Carpe Diem Kombucha is a premium RTD tea sold in Western Europe. The brand is also in bottled water in Switzerland and Austria using plant extracts and slight carbonation to offer a healthy alternative to carbonates. . The company owns two Formula One teams (Red Bull Racing, Scuderia Toro Rosso), a NASCAR racing team as well as several football teams in Brazil, the US and Germany. . In South Africa, the company is partnering with Cell C to offer voice and broadband services as a mobile virtual network operator (MVNO), ie a company that provides a mobile phone service but does not have its own licensed frequency. Red Bull Mobile will be the second MVNO in the country, after Virgin Mobile. . It also sponsors many events - from cliff diving to air races - and subscribing to Red Bull Mobile is a way for people who like the brand to access further benefits when they attend these events. These kinds of partnerships between operators and consumer brands are common in Europe. In Germany, for example, one operator, E-Plus, has 19 such partnerships. It is a way for these brands to get closer to their target group. . The Group also includes Austrian TV station ServusTV, lifestyle and fashion magazines and a construction company called Bull Bau. . Red Bull had 8,966 employees in 165 countries as of 2012. The company, which is not listed, traditionally finances its investments from its cash flow.

. Red Bull received approval from the Brazilian government to build its first production facility in the country in early 2010. The company's initial investment in the project is expected to be around US$111 million. This will also be the company's first production facility outside its home market, indicating a shift from a single production site and the importance of the Latin American market to Red Bull. . The sustainability of its growth and strong position is questionable as the competitive environment changes. While its products are present in more than 160 countries, most of its soft drinks sold around the world come from one single site. . The company is known for combining the production of the can packaging material and filling at one site in order to save on transportation time and costs. The key advantages of one single site include consolidated management, an up-to-date inventory and energy savings. The main downside of a single production site is perhaps the extra distance needed to ship all its finished goods to different parts of the world. Being unable to produce locally to supply regional markets can make retail prices less competitive than those of local products. In Brazil, Red Bull's retail price is 40% higher than that of Burn. . In 2011, the rumour that TCCC may look to fully acquire or partially acquire Monster surprised analysts and should have alarmed Red Bull. If Monster were to be under TCCC's full control, their combined volume sales would be very close to those of Red Bull and would certainly pose a threat to Red Bull's global leadership. Although TCCC did not acquire Monster at that time, the possibility of an acquisition has not been ruled out and the company was the subject of more takeover rumours in early 2013. . As Red Bull entered China in 2011, the company could also consider building a facility there to serve the Asian market over the medium term. There are strong arguments for combining forces with sister company TC Pharmaceutical to better penetrate Asia Pacific markets.

© Euromonitor International SOFT DRINKS: RED BULL GMBH PASSPORT 33 STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS RECOMMENDATIONS Holding onto top spot in energy drinks

Brazilian production Work for benefit of both Red Bulls in Asia Pacific

. Establishing production in Brazil is a wise move for . The failure of TC Pharmaceutical and Red Bull Red Bull. Relinquishing to some degree its highly GmbH to work together for a cohesive Asia Pacific centralised production model will help it to better strategy will expose both players to competition compete in the emerging markets. The move to from Japanese brands and from US-based Brazilian production will also open up new multinationals such as TCCC and PepsiCo. The opportunities in the Americas. The Brazilian market Thai Red Bull brand has a long history in this however is crucial to the company’s ambitions region and is suffering from waning consumer given the level of growth expected to take place interest in the face of new and exciting launches. here. Red Bull GmbH’s opportunities will continue to be limited for the time being as a result. Edition range Premium positioning

. While this report does not cover on-trade sales, . Monster and Burn will remain major threats. The popularity in this channel has a subsequent benefit price differential between these brands should be for off-trade retail sales. The launch of the Edition reduced. Red Bull can continue to position itself as range should be extended to the on-trade with a premium and maintain a price premium but in order marketing campaign to educate consumers about to gain better traction among younger consumers how to mix the new flavours. Rolling out the range and access to a wider demographic the company to other markets where market share erosion has should focus on driving volume growth particularly taken place such as the UK is also recommended. in emerging markets or risk market share erosion from TCCC-backed energy drink brands.

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