How Red Bull Got Its Wings

Chaleo Yoovidhya, a Thai entrepreneur from humble beginnings (son of poor Chinese immigrants), started TC Pharmaceuticals, which produced antibiotics in the 1960s.

In 1970, Chaleo realised that most of the energy drinks available for purchase were imports. The most popular energy drink in the country, Lipovitan, was brought in from Japan. The vast majority of these energy drinks targeted exclusively the well-to-do in Thailand’s cities.

Chaleo, though, decided that the middle-class and working-class people who do physically demanding occupations are the ones who should be buying these energy beverages.

Chaleo decided to develop his energy drink. He utilised the same Taurine, Caffeine, Vitamin B, and glucuronolactone found in commercially available energy beverages. Nonetheless, he did change one thing. In general, energy drinks tasted like medicine. To appease the local palate, Chaleo added some sugar to the beverage. Now that the product was complete, Chaleo focused on marketing it.

The logo or symbol that Chaleo chose, in the end, had to show strength and energy. Accordingly, he decided to use the Wild Gaur, a massive bison native to Southeast Asia, as the brand’s mascot. In the final logo, two Red Gaurs collided in mid-charge with a yellow disc. Krating Daeng translates to “Red Gaur” in Thai, thus, he gave the drink that name.

Finally launched in 1976, He sold these through pharmacies. The drink quickly became popular because it had a unique Thai name, was cheap and had a catchy label. Chaleo spread the products to places outside of the big cities, where he saw a market opportunity. For marketing, Chaleo began to support local Muay Thai (Thai martial arts) competitions. Thais consider Muay Thai to be their national sport. As a result, Krating Daeng quickly became well-known across all of Thailand. It only took a year for it to be the number two energy drink in Thailand, behind only Lipovitan. Two years after its first release, in 1978, it became the leader. After then, Krating Daeng was Thailand’s unofficial beverage.

When Chaleo started selling Krating Daeng in Thailand, he was pleased with the results. Before he met Dietrich Mateschitz, he had no intention of spreading it to other regions of the globe.

Enter Dietrich Mateschitz

The Austrian Dietrich Mateschitz sold toothpaste for the firm Blendex. On a business trip to Asia in 1982, six years after Krating’s inception, he found himself in Thailand.

As he rode along, he saw that tuk-tuk drivers were fuelling up on an unusual beverage. Not just drivers, but also many weary travellers and blue-collar employees, were drinking the syrupy brew to refuel and re-energize.

He found that Krating Daeng helped with jet lag. His exhaustion and fatigue from jet lag quickly dissipated, and he felt revitalized. In the course of his time in Thailand, Dietrich drank many more cans than he had before.

Original idea

He saw that there was a market in Europe for this particular beverage and decided to start importing and selling it there. He brought back several cases of Krating Daeng and pitched the idea to investors, who were interested in expanding their businesses into the European market. The problem was that nobody could put money into Dietrich’s concept.

Dietrich did not back down. In 1984, he contacted Chaleo (who was also earlier one of Blendex’s licensees), proposing to go into business with him to spread Krating Daeng throughout Europe. He convinced Chaleo that they could grow Krating Daeng into a major international company. Dietrich put all his savings totalling $500,000, into this business venture. As part of the agreement, Chaleo understood that he and his partner would each own 49% of the business. The remaining 2% was given to Chaleo’s son.

With this agreement in place, manufacturing would still take place at TC Pharmaceuticals in Thailand. And Dietrich would solely be responsible for European sales and distribution. Red Bull still outsources the majority of its activities, including production, today. Only distribution and advertising are addressed.

Dietrich looked at a different target audience. He had the product marketed at college students and young professionals when it debuted in Europe (ages between 18-30 years). Furthermore, the drink would be marketed as a high-end item, unlike its counterpart in Thailand. There would be an almost 2.5 times premium above the cost of a regular drink. Some tweaking of the formula – it was Mateschitz’s idea to carbonate it. Furthermore, he swapped out the old bottle of Krating Daeng medicine with a brand new, snazzy one – a compact silver can. He settled on Red Bull since it sounded most like Krating Daeng in English (Red Gaur).

Difficult beginnings

Dietrich planned to launch sales of the beverage first in Germany and Austria. However, due to its ingredients, it could not be legally distributed without special permission. German regulators did not approve the beverage owing to the high Taurine content. In 1987, Dietrich focused his efforts on only Austria.

Initially, the criticism he received from focus groups with potential customers was quite disheartening. Participants in the taste tests said that the drink was vile on the tongue and left an unpleasant, sticky aftertaste. (The gasoline-like liquid tastes and smells very sour and harsh.) A market research firm assisting Dietrich with a focus group study said that there was likely little demand for such a beverage in Europe.

Instead, Dietrich decided to continue

Guerilla marketing

He made it apparent that the party crowd was his primary target. While he would have liked to promote Red Bull via more conventional channels like television and print media, he simply did not have the funds to do so at this time. Therefore, he set his sights on developing innovative low-cost growth hacks for the beverage’s market penetration. He began by recruiting students to act as ambassadors or representatives of the beverage in their social groups. They were compensated to throw massive parties at which Red Bull was given out for free.

He paid students to spray paint their cars with Red Bull designs and put big cans of energy drinks on the roof. In Austria, Red Bull was first seen on the roads in the form of dozens of specially modified automobiles. Since it was the 1980s, this kind of campaign was very unusual, so everyone was very interested.

Dietrich’s second wild concept was called “Littering,” and it was as ridiculous. Empty cans of Red Bull were strewn in public locations like busy streets and nightclubs to give the appearance that sales were brisk. This assortment of ingenious gimmicks did wonders for Red Bull’s bottom line. And a beverage that testers and consumers alike despised saw a sudden and unprecedented uptick in interest. In its first year on the market, Red Bull almost topped one million can sales in Austria.

It was a kind of marketing when the firm promotes its wares using means that are meant to be shocking or otherwise out-of-the-ordinary.

Mixing Red Bull with other alcoholic beverages led to the creation of trendy new drinks like Vod – Bull, Liquid Cocaine etc. The news quickly went international. After Red Bull was outlawed in Germany, locals began importing it illegally from Austria. Manufacturers of containers failed to keep up with the surging demand for cans. Many imitation brands appeared as well. No other energy drink came close to competing with Red Bull in terms of sales.

Instead of resting on his laurels, Dietrich put more money into promoting the Red Bull brand. Red Bull’s catchy slogan, “Red Bull gives you wings,” was conceived in part with the aid of a trusted friend. He aimed to have Red Bull represent excitement and risk. He chose to cement that image by having Red Bull host exciting and entertaining adventure events, and the company has continued this tradition to this day. In 1992, in Vienna, the inaugural “Red Bull Flugtag” was held. The objective of the event was to have participants launch humorous manual flying devices into a river from a platform. In the years that followed, similar gatherings were planned all around Europe.

In 1994, it landed in the United Kingdom and Germany. Around a million cans per day were being sold by 1997. It also made its way to the United States market during this period.

Getting the business off the ground.

After beginning its expansion outside Europe, Red Bull has become a well-oiled advertising machine. As was previously noted, Red Bull is just concerned with marketing and does not produce the beverage itself. In 2020, the company made $7.4 billion, and it spent an enormous 33% of it on advertising. Coca-Cola and Pepsi, two of the biggest names in advertising, barely spent 8.4% and 4.4% of their sales on advertising, respectively.

Red Bull has successfully built an empire around their product by spreading its massive marketing budget across a wide range of intermediary organizations.

1. Sports

Red Bull is well-known in the sports world for its ownership of two Formula One teams -Red Bull Racing, and Scuderia Alpha Tauri. Red Bull Racing has consistently placed in the top three in Formula One.

Red Bull also has a stake in five different football teams and three different stadiums in countries all over the world, including Europe, the United States, Asia, and Brazil. They also own a handful of teams in hockey, yachting, racing, and e-sports throughout the world. With these efforts, Red Bull can reach a wide audience of sports fans.

Red Bull incurs substantial expenses for all of this, but the company generates profits by selling advertising space in its football stadiums and racing tracks. These earnings are in addition to the sales of Red Bull beverages at these shows.

2. Sponsorships

Red Bull has recruited prominent players from a variety of sports and regions to increase its visibility in the sports industry. Neymar, Alexander Arnold, Max Verstappen Ben Stokes, and KL Rahul are just a few of the famous sportspersons who have signed up. Unlike more conventional brands, Red Bull has dedicated facilities for the improvement of sportspeople’s performance. These facilities help players hone their skills and perform better on the field.

3. Extreme Events

Red Bull organises more than 40 extreme and competitive events annually, while other businesses vie for sponsorships on these occasions. The Flugtag is the most famous of these activities, but there are also Soapbox racing, paragliding, kayaking, mountain biking, and cliff diving, among others. These kinds of things keep the company’s image of daringness intact.

Spending on such events also attracts a large audience via online platforms. In 2012, for the Stratos project, Felix Baumgartner of Austria was filmed parachuting from a weather balloon 39 kilometres above the earth’s surface. With over 46 million views on YouTube and counting, the video has become a social media phenomenon. Look throughout the video, and you’ll see Red Bull logos and slogans.

4. Media Company

Red Bull is a great place for businesses to advertise because it sponsors dozens of sports teams and events that are watched by millions of people around the world. To this end, they operate a television network (Red Bull TV) and a magazine (Red Bulletin) that can be accessed in both analogue (books, cable TV) and digital (internet, YouTube, etc.) formats to generate revenue from advertising. Videomakers all around the world may benefit from the massive amounts of material produced during these events and activities. Red Bull Media House, a wholly owned business founded in 2007, is responsible for selling all of the advertising space inside the Red Bull ecosystem.

5. Others
   Also, they have put money into companies that have nothing to do with each other, like the fashion label Alpha Tauri, the website Wingfinder, which helps people figure out what kind of person they are, and the platform Destination Red Bull, which helps people book adventure travel. The truth is, however, that they are not entirely unconnected. You can link their emphasis on adventure and the statement-making nature of the Red Bull brand.

The success of Red Bull is just additional evidence of something that is becoming more crucial in the corporate world today. That’s how a unique brand and a compelling narrative can set you apart from the competition. Even in an industry where there is so little variety, energy drinks are almost interchangeable. It’s no surprise that Red Bull has a 43% share of the worldwide energy drink industry.

Reference

https://www.forbes.com/global/2005/0328/028.html?sh=46b87143b4ff