It was a beautiful spring day in 2009 – the 19th of Mai to be more appropriate. The huge energy drink seller Red Bull released its coup called RB Leipzig. What is RB Leipzig? RasenBallsport Leipzig is a football Team that currently plays in the fourth league in Germany. The special thing about the club is that Red Bull already invested millions into new players, a new performance centre and professional structures. Therefore the club is quite successful and made up two leagues since the foundation in 2009. But the project in Leipzig is only one of many Red Bull Projects. The energy drink company owns a very successful Formula 1 team and several other football clubs in Austria and in the United States. It supports almost every successful extreme sport talent world wide, host’s air races and employs fancy DJ’s.
“Red Bulls 8000 employees world wide work in the marketing or sales department”
It seems like everywhere you go you see Red Bull signs. Marketing all over the world, in each and every country, in every modern club or restaurant. According to JÖRN KABISCH, economic editor at freitag.de: “Red Bulls 8000 employees world wide work in the marketing or sales department. The production of the bottling of the drinks is made by extern companies.”
An analysis of the economic magazine “brand eins” states “Red Bull spends 1 billion euro yearly only on marketing while the production cost amount is 600 million euro.” That led me to the questions: Does this advertisement effort make sense? Red Bull spends so much money on promoting the product everywhere but do they generate enough profits?
”Red Bull uses 30% of its yearly revenue only for marketing”
Jörn Kabisch quotes that: ”Red Bull uses 30% of its yearly revenue only for marketing. This is a lot. Only food producers like Nestle or Beiersdorfer invest an equal percentage.” But the most important thing about Red Bulls advertisement strategy is that people a ready to pay up to 2,50€ for one bottle of Red Bull. Kabisch insists: “After deducting the costs of production Red Bull has a profit margin of 70%. There is no comparable drink producer.” The advertisement is also responsible for Red Bulls huge growth over the last 20 years. “Since the release of the product in 1987 Red Bull only had binary growth rates.”
In the first place we can conclude that the companies advertisement is essential for its success. But how much profits are there actually? A view on Red Bulls balance sheet tells us something about 311,2 million Euro in 2011. Since 2011 the company does officially not have any debts.
WOW! A totally healthy company!
But while the profits are increasing this year there was a time in 2010 when sales decreased. Kabisch already predicted that: “Red Bulls golden times are over”. From today’s point of view we can say that he was wrong. What many people don’t know is that the energy drink producer owns over 70 different other companies all over the world. The popular health drink “Carpe Diem” is one of them. So even if sales should sustainably decrease one day … by that time Red Bull will have a supporting leg with a huge marketing support …