Bafflement over Red Bull redundancies

The sweeping restructure at Red Bull UK would normally suggest a company in turmoil, but the brand that created the energy drinks category still commands a 76.5% share of the market, and last weekend hosted the latest round of its Air Race World Series in London.

Red Bull is believed to be making redundancies across the company with a view to streamlining the business. According to a source close to the energy drinks giant, the company started a four-week consultation with its marketing and communications team last week and is looking to axe about 20 jobs. The source claims that Red Bull wants to reduce its marketing team to just four key people.

The consultation is understood to follow a string of departures from Red Bull in recent months. The company has also just promoted head of planning Anoushka Feiler to marketing director, following the promotion of Guy Carling to brand director.

The proposed changes have left many in the industry questioning why managing director Nigel Trood is introducing such a radical restructure, particularly as Red Bull’s marketing has been so successful to date. A soft drinks industry source says that Trood is keen to establish his own team and step out of the shadow of Harry Drnec, the former managing director.

Cousins & Davies Associates director of marketing Paul Cousins says that Red Bull’s media and brand strategy, which includes sponsoring extreme sports and some TV and cinema advertising, has been “very clever”. He adds: “You would take a long hard look at that strategy before changing it.” Trood is also expected to review the brand’s sports strategy. It has got increasingly involved in more mainstream sports such as Formula One and baseball in recent years, and the departure of many of the marketers from its airsports team has also left the brand’s future association with more off-beat sports in doubt.

The energy drinks market is still growing, but it is maturing, says Zenith International sports and energy drinks expert Jenny Foulds. She adds that while the market saw sales grow by 12% from 2005 to 2006, the rate of growth is expected to drop to just 6% by 2010. This is attributed to the growth of healthier drinks, such as functional waters.

“Red Bull is still the dominant global brand,” adds Foulds. “But it is witnessing an erosion of its market as there are lots of other energy drinks out there.” 

Another source adds that Red Bull has become complacent and has “relied on its iconic brand for too long”. The insider adds: “Other operators are moving with the times and bringing out juice-based products, whereas Red Bull is starting to suffer from its staid image.” 

Trood confirms that the company is in the process of a restructure that will be completed by the end of the year. But he denies that a consultation is taking place or that he plans to make any redundancies, before adding: “We haven’t made those decisions yet, but we are having a number of meetings about taking the business forward.” 

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