Red Bull is an Austrian company that markets the energy drink, Red Bull. It is one of the best-selling energy drinks globally, with 7.9 billion cans sold in a year. The company obtains money primarily by selling its energy drinks in different flavours. These energy drink sales are supported and assisted by largescale promotions and advertisements, earning the brand a value of 15.99 billion euros by 2021. Lets know about How Does Red Bull Make Money?
Versatile Business Model
With 32 years of market experience, Red Bull marketed itself through advertising, sports events, sports teams’ ownership, sponsoring, and endorsements, which made the name Red Bull reach all the corners of the world. Their marketing strategy gives excellent strength to the company’s performance in all their ventures. In order to promote the product and reach the intended customers, the young urban population, red bull is massively involved in sports and recreational activities.
All their efforts act as a cycle of income creation for the company in generating profit. Red bull exploits all the possibilities to communicate with its target consumers constantly by using all the available promotion methods.
Little history
Red Bull does further in the business than just selling energy drinks, and the way Red Bull energy drink firm earns money includes a lot of sales and marketing. The journey of Red Bull began when Dietrich Mateschitz, an Austrian entrepreneur was inspired by an energy drink named Kareting Deang. Chaleo Yoovidhya introduced Kareting Deang in Thailand in 1976. Inspired by the magical quality of the drink, Mateschitz decided to bring the product to his home country in the form of an energy drink. He tried to influence several investors, but his proposals were overturned because none saw a market possibility for the product outside Asia.
He was well aware that there was no market for such a product and decided to create one. He was so convinced of his idea and invested half the money himself along with his Thai counterpart. Both these entrepreneurs joined their hands and created the Red Bull Gmbh in 1984 in Austria. The brand and product name red bull originated from Thailand; Deang means Red, and Kareting means giant Indian bison. They both use the same logo and brand for selling their energy drink in two different versions one is for the Thai market and the modified ingredient version for western consumers.
Thus, the Red Bull’s western version was introduced in 1987 in Austria. Initially, the product was banned in neighbouring Germany but being an outlaw, the product got some publicity, and Germans crossed the border to get the energy drink. However, with little or no time, the Red Bulls energy drink market grew all over Europe and then to the United States. Surprisingly the company sold approximately a million cans per day. Red Bull follows a different form of operation; the production and filling of the cans are fully outsourced, and the company concentrates on marketing and selling the product.
Profit margins
One of the main distinctions that make Red Bull a leader in the global market is that it can charge a much higher price for each can sold. The production for a single can of this energy drink cost only 0.09 $. The average wholesale price is around 1.87$ in western countries, which is an excellent profit margin. The retail price is 3.59$, which would attract retail ventures to sell Red bull and help the company expand its business opportunities.
The income generated from selling each can, a third of the profit, is being reinvested in separate spheres. It has been proven that these reinvestments are highly profitable for the company in both energy drink sales and those investments. With more sophisticated advertising methods, Red Bull succeeded festivals bars and young minds.
The space jump initiative of Felix Baumgartner cost only 50 million for the company, and the approximate return from the event is six billion$, which is a great success. this event is the pinnacle of advertising nobody ever performed. Red Bull bought the New York soccer team for 25 million$, which now has a market value of 290 million$. All the five-foot ball clubs owned by Red Bull are financially successful, which guarantees the company’s future.
Conquering young minds
In the initial stages of its operations, the company concentrated among young people, especially from colleges and universities, to use and promote the energy drink. Red Bull created Student Brand Managers to promote the product among young students on campuses. The company sponsored and conducted parties and shows entirely supported by the company. It was only the start of the marketing strategy of Red Bull. The brand engaged with its consumers in story creation and performing rather than the traditional way of storytelling. They never wasted time to find out stories that would promote their product but created their own stories and spread them all over the globe.
More than just energy drink
Unlike following the traditional market appearance, Red bull followed a different marketing model from the beginning. The slogan “Red Bull give you wings” became so famous with the revolutionary marketing techniques. Mainly the company do four kinds of promotion;
- sponsoring extreme sports events
- owning sports teams and football clubs
- endorsements for athletes and talents in various formats
- familiarising the brand in all the possible ways by creating a brand myth
To create and popularize the brand name Red Bull was involved in extreme sports contests such as Red Bull cliff diving world series, Red Bull air race, Stratos Space Diving project, and Red Bull crashed ice, all of which assisted them to create a brand myth. Even a person who never drank Red Bull’s energy drink would be familiar with its logo and name.
Self-promotion
Apart from these sporting events, Red Bull owns multiple teams in varied sports, including Formula One racing teams Red Bull Racing and Scuderia Alpha Tauri.
Football clubs such as RB Leipzig, FC Red Bull Salzburg, FC Liefering, Red Bull Brangantino and New York Red Bulls. These sports teams generate a considerable amount of wealth for the brand and help advertise its energy drink and these teams are successful in their respective fields. Another technique used by Red bull is celebrity endorsements, which include athletes from all formats; Neymar, Tyler Belvin’s known as Ninja, KL Rahul in cricket, Blake Griffin in NBA are some of the leading names. Red Bull also runs a music label named Red Bull Records, which sponsors artists and musicians.
The versatility in the market approach enormously supports the company to stay at the top of the market in both performance and revenue creation. All their efforts are helping them to generate more money; every reinvestment is further creating profit.
Frequently asked questions
What is the future of the Red Bull energy drink?
With a growing health-conscious population all around the globe, the future of energy drinks is significantly less. So, there would be a reduction of profit directly coming from the selling of the drink. Since the company is reinvesting its profit in various spheres, it would not be affecting its survival.
Is Red Bull Energy drink safe?
The product is available in more than 170 countries around the globe. Moreover, it is the number one selling energy drink in the world in terms of numbers sold. The brand claim it is safe and healthier to drink since it boosts mental and physical energy. There are huge anxieties over the side effect of the product because of the ingredients used to make the product, especially when consumed regularly and in large quantities.
