Why Red Bull Isn't A Drink Company

back to back to back and here we go the bolts [Applause] October 14th 2012 millions of viewers watch as skydiver Felix Baumgartner ascends to the edge of space takes a small step and then free falls about 120 000 feet down to earth during his descent he not only broke the sound barrier but a handful of World Records as well however this spectacle was not from NASA or SpaceX when you look a little closer you see the unmistakable symbol with Red Bull of course this is just one of countless examples of Red Bull's extreme and unorthodox marketing strategies they're responsible for 10-story motorcycle jumps snowboarding down an active volcano not to mention owning multiple racing football and Esports teams so how did this simple energy drink which started out as an obscure medicinal syrup become not only one of the biggest disruptors in the beverage industry but also one of the best marketed products ever by the end of 2022 the global energy drink industry will be worth around 90 billion dollars and sitting on top of the caffeinated Throne is Red Bull who in 2021 alone sold more than 9.8 billion cans across 172 countries more than one can for every person on the planet and yet despite this Red Bull began from the most unlikely and humble of beginnings was born in rural Thailand and his parents were duck farmers who also sold fruit they had very little money and couldn't afford to give their children a formal education thus chelio grew up working on a farm with very little prospects however however when his parents sent him off to Bangkok to go and work with his brother as a pharmaceutical sales rep he worked extremely hard and saved up enough money that in 1956 he was able to open his own small business which he called TC pharmaceutical Industries initially the business was designed purely to sell medicines such as antibiotics that he imported however around this time pharmaceutical companies in Japan had started creating herbal syrups labeled energizing tonics they were a big hair and soon started getting imported to Thailand as well after nearly 10 years of running TC pharmaceutical Industries chileo decided he wanted to create his own version of these energy tonics however chelio saw that the current products on the market were quite expensive and targeted more towards wealthier consumers given that he came from poverty himself he knew that it was actually the blue-collar working man who needed the energy much more construction workers Farmers people doing lots of physical labor which required constant attention and energy so after analyzing the formulas of other drinks on the market chelio created his own similar Elixir containing Cafe fiend B vitamins and a chemical called taurine but what truly set shalio's concoction apart from the competition was the inclusion of large amounts of sugar giving the syrup a more appealing flavor and even more of an energy boost he named the beverage kratting Deng in Thai Dang means red which for him symbolized perseverance but kratting doesn't actually mean ball it means Gore which is a relative of the water buffalo and the largest species of wild cattle in the world the reason for the choice is that chelia wanted the brand rooted in imagery of strength and power however his drink was hardly an overnight success at the time products from countries like Japan and South Korea dominated the market but chelia's decision to focus more on provincial and rural parts of Thailand unlike its competitors who focused on big cities like Bangkok proved to be a wise choice to get things started chelio gave some free samples to truck drivers who are working long hours and needed help staying alert and he pitched it as a stimulant to improve energy and concentration it then steadily grew via word of mouth and began to grow in popularity amongst Thailand working class using the money from initial sales chelio began sponsoring Mai Tai matches which was the most popular martial art in Thailand and a big part of Thai culture this not only helped his drink get recognition but created an association with high energy and power this was a great strategy because most of the other energy drinks at the time were pretty generic whereas right from the start chelio focused on building a brand and his drink almost became a symbol of perseverance amongst the working class by 1980 his product had become a big success all over Thailand however it was an unlikely encounter with an Austrian businessman selling toothpaste that would soon make this drink a multi-billion dollar Global Empire whilst it was chelio who first created the drink that would later become known as Red Bull it was a man named Dietrich matajitz who helped the business become what it is today Dietrich had studied World Trade at the University of Commerce in Vienna although between partying traveling and chasing girls it took him 10 years to graduate however he was always known for his wild imaginative ideas and after graduating had worked his way up to become International marketing director of a German company called blendags who manufactured products like skin creams shampoo and toothpaste as part of his job a Dietrich had to travel all over the world this meant many long days and nights of airports and flights on one particularly exhausting trip from Europe to Thailand where he was meant to be attending an important meeting he felt so tired that he went into a local store and asked if there was anything that could help him it was here that he discovered chelio's energy drink cracking dang Dietrich tried it and in just a few minutes he not only felt more energized he no longer had his jet lag he became an avid Drinker of the product but at this time it was only available in Thailand shortly after this Dietrich read a newspaper that the highest taxpayer in Japan was another one of these energy drinks this confirmed to him just how popular these products were in Asia and yet there was nothing really like it in the west now to be honest Dietrich had been getting kind of bored of his job at blend ax and so he decided to make a very bold move he quit his well-paying job and tracked down cheleo saying he wanted to go into business with him dietrich's plan was to take chelio's energy drink International and introduce it to European consumers after a little persuading the two men went into business together each putting in five hundred thousand dollars of their savings they agreed Dietrich would run the operational side whilst chalia would continue to focus on the product side they both got 49 of the company with the remaining two percent going to chelio's son dietrich's first big decision was they should form a new separate company for Less called Red Bull which would be simpler and more memorable than the literal translation of red Gore and thus in 1984 Red Bull officially was founded in dietrich's home country of Austria however before launching they did some customer research to test how European audiences responded to the product and the feedback was awful trial group said the drink tasted disgusting and at market research suggested the drink was too unhealthy and not appealing at all but the two Red Bull Founders so strongly believed in the idea that they pushed on anyway they made some important changes using the feedback though like carbonating the drink and switching to a Slimmer Sleek silver can which looked more premium and distinguished it from competitors Dietrich also said that in order to feel like a premium product they had to have a premium price and so they charge nearly double what consumers were used to paying for other carbonated drinks pricing this High seemed like a very risky move but would later be crucial to the company's success they also decided on the now famous slogan Red Bull gives you wings to represent a product that provides energy focus and potential this would later cause controversy though but for now in 1987 Red Bull was finally ready to be released in the West quick question for you do you struggle to find unbiased financial news that's actually interesting and relevant well I think I have the solution for you with today's video sponsor the daily upside a free business and investing email newsletter that over 750 000 people subscribed to myself included it's really interesting and witty but the reason I like it so much is that they provide real analysis of the most important news of the day so unlike traditional media where their headlines are filled with click bait and fear-mongering the daily upside gives you calm collected insights from a team of financial professionals every weekday morning they send you one email with a brief of the most important news along with interesting stories that are shaping the business world for example I recently read about how Tick Tock is building out an e-commerce supply chain and how it could be trying to create an all-in-one everything app as someone who likes to stay on top of the news to create videos like this I can't recommend this newsletter enough and it's completely free to sign up if you use the link in the description below it only takes a few seconds to sign up and if you don't love it you can always unsubscribe so visit the link in the description to learn more now on April 1st 1987 Red Bull launched in Austria and to create the premium field theatric Wantage the beverage was initially offered at trendy Austrian ski resorts to begin with Red Bull had a very small team of just a single secretary and a six-person sales force and since they had an extremely small marketing budget Dietrich knew he couldn't afford expensive tv ads or elaborate campaigns like other drinks companies instead he initially relied on more creative lower cost marketing strategies to spread the word about Red Bull firstly they reached out to popular charismatic and influential college students they would then give them cases of Red Bull for free and have them drive around campus in Mini Coopers decorated with enormous Red Bull cans on top they also gave these students money to throw parties where Red Bull was given out the idea was that these popular students would shape the buying habits of their friends and fellow students in fact they even started hiring attractive women to be Red Bull girls and just hand out free drinks on University campuses meanwhile Red Bull sales people called Musketeers offered free callers to bars inspiring bartenders to feature the beverage in new cocktail cells which helped Red Bull become known as a mixer with alcoholic drinks Red Bull even began leaving empty cans in bars and nightclubs so that people would constantly see the logo and be curious to try the drink themselves all these tactics proved successful and rebel sold over 1 million cans in the first year however financially they actually made a loss that year since they'd given away so many free products as part of their marketing schemes but Dietrich knew that investing in their brand especially in the early stages would pay dividends later and he was right by the second year sales doubled to 2 million cans and again to 4 million cans by the third year red bull spread across Europe and at one point got so popular in Germany but they actually couldn't produce enough cans to keep up with the demand of course despite the growth competing in mainstream advertising like TV ads was still a very expensive option podiatric had always loved extreme sports and realized that very few big companies seem to be sponsoring these events like for example cliff diving sponsoring extreme sports helped sell Red Bull as more than just an energy drink but a lifestyle Red Bull became a so associated with Daredevils and high adrenaline activities by 1997 Red Bull was ready for its U.S debut although by that point the energy drink Market had become a 1.7 billion business and thus a lot more competition had entered the market and unlike other beverage Rivals such as Coca-Cola Red Bull had no secret patented formula all the ingredients are clearly labeled on the can and initially Red Bull literally just offered one flavor which typically performed poorly in taste tests and yet despite all this Red Bull sales continued to rise in an interview Dietrich was asked why he didn't try to make a better tasting product to which he replied the Red Bull was never about the product itself but building a brand around an experience you see at its core Red Bull never set out to be a beverage company it was a storytelling company the goal was to bring customers into the evolving myth instead of trying to cram a product into their lives to achieve this the company had taken great efforts to attach itself to a growing collection of events and spectacles that entice customers to the brand Red Bull spends far more than most companies on Market thing but instead of merely running ads on why you should buy the drink or sponsoring a single event Red Bull will purchase entire sports teams construct in-house media companies and host world-class events it all began with Austrian Formula One Legend Gerhard Berger who became Red Bull's first sponsored athlete in 1989 but today the company sponsors over 500 athletes Daredevils and adventurers spanning the entire field of professional and amateur sports from football to ice hockey to formula one and now even Esports interestingly this has actually opened up other revenue streams for the company for example they make money from Formula One prizes and sponsorships giving them yet more money to reinvest in marketing but this long-term approach is extremely effective because for example by owning a team like the New York Red Bulls every time the media or fans are discussing the team it's naturally bringing Red Bull into conversation and people's subconscious the company has even invented its own sporting events the fluke tag created in 2000 is the German word for flying day during this event Red Bull created hundreds of teams worldwide I had compete in homemade flying machines to see how far their wild Creations Can Fly And if you're wondering the current record stands at 258 feet by creating events in which this product can be served then its brand narrative can unfold Red Bull has again successfully turned expenses into a successful Revenue stream all on its own outside of the World of Sports Red Bull also sponsors art and music events such as Lollapalooza and Austin City Limits and of course by 2012 the company was sending Daredevils to the edge of space to jump out on free fall at over 800 miles an hour and despite taking years to plan and tens of millions of dollars it seems like this was worth it the YouTube video of this set a world record for most concurrent live streams and has gone on to reach well over 120 million views and right after this the company saw Global sales Rise by 13 when Red Bull created these memorable events or set World Records they're often talked about or watched long after they happen providing a great steady long term return on their investment but here's the most interesting and unique part of Red Bull strategy during all of these events and spectacles the company puts on on they hardly ever refer to their drink for example with Felix baumgartner's record-breaking Free Fall most companies would probably have made sure that when he landed he was seen drinking a can of Red Bull but there was no mention of the drink and that's because Red Bull's advertising so often doesn't feel like advertising Red Bull aimed for brand recognition rather than actively selling their products they tried to make something genuinely exciting for Their audience to Simply associate their brand with Incredible things and in a world where we are inundated with the ads in our face and sales pictures this more subtle approach is effective as then it doesn't cheapen the spectacle it doesn't feel like we're watching an ad it feels like we're just watching something cool from a company who happens to also sell energy drinks the truth is Red Bull isn't really a drinks company it's a marketing company and as a result they've been able to position Red Bull as more of a premium lifestyle product which is ironic because it's the total opposite of how it began in Thailand for blue collar workers Red Bull started out as the cheapest energy drink now it's one of the most expensive the recipe hasn't really changed that's just the power of great marketing and branding as a result in some countries today Red Bull has more than 80 market share of energy drinks and since 1987 over 100 billion cans have been sold worldwide however you don't become the number one energy drink without a little controversy Red Bull has been banned in numerous countries over the years most famously in France when a teenager died after drinking multiple cans of Red Bull during a basketball match there was understandably a lot of panic now there was no evidence actually found that Red Bull caused the death but it still prompted accusations that the drink's caffeine content was excessive and that some of Red Bull's other ingredients might not be as safe as they made out however by 2008 the full version of Red Bull was for sale in France again since Red Bull successfully argued there wasn't sufficient evidence that any of the ingredients were harmful I mean it wasn't exactly healthy but not unhealthy enough to be banned then in Germany in 2009 Red Bull Cola was found to contain Trace Amounts of cocaine causing some German states to pull the drink as well but once again after further research it was found to be such a negligible amount that you'd have to drink almost impossible amounts to actually feel anything so the drink was reinstated there too in 2013 Red Bull came under Fire again when it was sued for false advertising over its slogan Red Bull gives you wings now to be fair to read Bullhead surely nobody actually expected to grow literal wings and fly so this lawsuit seemed like a frivolous cash grab but they managed to argue that since Red Bull didn't give any functional athletic Improvement it was false advertising and rebel ended up paying 13 million dollars to settle the lawsuit now so far all of these issues seem kind of harsh against Red Bull but actually the real controversy about Red Bull is the one that most people in the west don't even seem to know about you see in 2012 the heir to Red Bull's Fortune Cherry Hill's grandson was accused of running over a policeman and killing him while speeding in his Ferrari it's then reported he didn't attend core and instead fled the country despite there being seemingly overwhelming evidence against them the case has not been pursued and in Thailand it's seen as an egregious example of how the ultra wealthy and Powerful are above the law and can get away with anything this prompted headlines like Red Bull air shows how to get away with killing a cop in Thailand with some even starting a campaign to boycott Red Bull now to be fair it's not like the heir to Red Bull's Fortune was actually involved in running the company but it's certainly a stain on the perfect image that Red Bull spends so much money to maintain however Red Bull's original Creator chelio would not be around to see that as he died just a few months before the incident in March 2012 aged 88. when he passed away he was Thailand's third richest person with an estimated 5 billion fortune and in fact to this day his co-founder Dietrich is the richest person in Austria that's because Red Bull is still a private company the founders never had to sell loads of their Equity as they had such great profit margins and could keep reinvesting back into the business using the profits they made so they both became obscenely wealthy and actually I think there's several lessons all of us should be learning from Red Bull foreign firstly Red Bull is proof that sometimes you don't need to invent something totally new you can bring an existing product to a new market or audience and have massive success by just putting your own spin on it secondly it's clearly a very effective strategy to find a product that's cheap to manufacture and then invest heavily in marketing to create a more premium feel and brand image for the product so you can charge higher prices that'll give you high profit margins giving you huge amounts of money to invest in even more marketing and thus create a virtuous cycle of growth for context some sources of estimated Red Bull costs about 9 cents per can to make yet they sell them for 1.79 or more and finally Red Bull is a reminder that the best marketing it's not just running ads the exact same way everyone else does it's actually doing something creative and original because the ultimate lesson from Red Bull is to not just sell a product but sell a feeling sell an image and there is perhaps just one company that has done an even better job of this than Red Bull if you want to learn the dark secrets of how Coca-Cola make billions of dollars despite all of the controversies they've been involved with check out the disturbing history of Coca-Cola by clicking right here trust me it's a crazy one I'll see you there cheers

Channel: MagnatesMedia

Views: 1,026,501

Keywords: Red Bull, the story of red bull, the history of red bull, red bull story, red bull marketing, marketing red bull, red bull business, red bull strategy, red bull company, red bulls marketing, invisible marketing, great marketing, successful marketing, companies with best marketing, red bull good marketing, red bull marketing strategy, red bull chaleo, red bull duck farmer, red bull truth, truth of red bull, red bull controversy, red bull business analysis, business stories

Id: ubHS3It6dqg

Length: 18min 55sec (1135 seconds)

Published: Sun Oct 30 2022