Red bull spreads its wings

It achieved market dominance with a single product, but now Red Bull is widening its focus with the UK launch of Sabai, a Thai wine spritzer

It achieved market dominance with a single product, but now Red Bull is widening its focus with the UK launch of Sabai, a Thai wine spritzer

In a soft drinks market that has performed sluggishly so far this year, Red Bull – the market leader by value in the &£1bn UK energy drinks sector – is still showing impressive growth, some 6% up on 2005 at the end of the first quarter of 2006.

Asked why the brand has enjoyed continued domination of its international markets, Red Bull UK chief Harry Drnec would once have waxed lyrical about the pragmatic nature and narrow ambition of the company’s worldwide teams compared to, for example, Coca-Cola. “We’re focused,” he told Marketing Week in an interview last year (MW August 11). “We don’t have a cherry drink, a lemon drink, a big pack, a 500ml or a 300ml. We have one functional product that may not taste as good as others but it works and we market it hard.”

But now comes the news that Red Bull UK is to market and distribute a wine spritzer drink called Sabai (MW last week). The brand, 20-years-old in Thailand, claims to sell 90 million bottles a year. It is now available in bars across this country, was launched into Tesco Express on May 15 and will be available in Sainsbury’s Local outlets from July 17.

The 5% ABV, ready-to-drink beverage, infused with hibiscus, is to follow the same global development path as Red Bull. Like the energy drink brand, it was born in Thailand and the UK will be its first foray abroad. It is produced by Siam Winery, owned by the family that also owns 51% of Red Bull – the other 49% belongs to Austrian entrepreneur Dietrich Mateschitz.

Although Sabai is not being launched under the Red Bull name and will be managed by its own dedicated team at Red Bull’s London headquarters, business and marketing decisions will be taken by Red Bull’s UK management. It could be overstating the case to argue this new venture will divide the attentions of Red Bull UK but, along with Carpe Diem, Mateschitz’s health drink marketed and distributed in the UK by Red Bull, it affects the single-brand policy that Drnec claims is behind much of Red Bull’s success.

Red Bull representatives refute this. Steve Loftus, Sabai’s marketing manager, says: “Just as with Red Bull, the Sabai product is unique. Red Bull UK will be the importer and distributor but the Red Bull team will remain as large and focused as it ever was. We won’t care too much about other peoples’ perceptions; we’re looking to innovate in the market and create a new category.” Loftus states the UK is a prime market for Sabai as it boasts 1,000 Thai restaurants, accounts for 500,000 visitors to Thailand every year and consumers are prepared to experiment. However, he refuses to comment on both advertising and marketing spend.

Drnec himself sounds typically bullish about the prospects of success. He says: “There has been a resoundingly positive response to the look and taste of Sabai, and with trade support increasing for summer Sabai is pioneering a new category.”

Drnec is qualified to recognise success from afar. According to Mintel, Red Bull sold nearly &£600m-worth of drinks last year, a 56% value share of the UK energy drinks market. Red Bull already seems to have the sector sewn up, but plans to double the size of its brand in five years to maximise both visibility and availability.

Now a top 40 grocery brand in the UK, Red Bull had a worldwide turnover in 2004 of â¬1.668bn (&£1.14bn), up more than 30% on launched in 2003 and the drink claims a 60% volume share of the world’s energy drinks market.

Red Bull’s marketing reflects the brand. It owns a Formula 1 motor racing team and holds extreme sporting events around the globe, such as the Red Bull Air Race World Series, which will take place this summer in Germany, Russia, Turkey and Hungary.

As Drnec says: “Our specialist Red Bull sampling teams don’t stand on street corners and randomly hand out our product. They seek out the people that could most use a functional energy drink. They target long-haul and taxi drivers, students: these people taste the product and ‘bang’, it works. That’s how we sold 300 million cans in the UK last year.”

Red Bull UK is about to become a soft drinks manufacturer with a portfolio of brands like many others – it will need all the experience and expertise it can call on if it is to succeed.

Facts and Figures

Energy drinks market leaders:

Red Bull v Lucozade

⢠The Red Bull and Lucozade brands account for 75% of the energy drink market’s volume and value

⢠Some &£12m was spent on advertising by energy drink brands in 2004, 95% of which came from Red Bull and Lucozade

⢠Lucozade dominates the UK volume market, shifting 137 million litres in 2005, compared to Red Bull’s 113 million

⢠Also in 2005 Red Bull sales reached &£589m compared to Lucozade’s &£234m – due to Red Bull’s premium pricing

Source: Mintel/AC Nielsen

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