RED BULL everywhere you look and go!

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 …

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5 thoughts on “RED BULL everywhere you look and go!

  1. Hey Max,

    I enjoyed reading your post – thanks!

    You do always see Redbull everywhere in the world – I almost started working in their marketing department back in Israel. I would have got one of those mini cars that you see on the street from time to time.

    I found how the marketing influences the revenues very interesting and would love to read more about that. You can see more information about this connection in a post I wrote about Nespresso –

    https://therealblogbusters.wordpress.com/2012/12/03/how-to-make-money/

    After reading your article, I decided to do some research of my own about the topic, finding out RedBull does not produce its energy drink, but uses an already existing energy drink in Austria, taking it and only marketing it to the rest of the world.
    This means that the only that RedBull is such a strong player in the energy-drink market is only because of marketing – interesting, no?

    you can check this link out –
    http://www.fastcompany.com/most-innovative-companies/2012/industry/media

    One last thing – you wrote that there are no competitors in the energy drink market that give alternatives – I argue differently: I saw in the supermarket at least 2 other companies which have the same can design like RedBull: XL and Blue

    How to keep reading interesting posts from you!

  2. Hey Buster: I’d love to know who you are so I might know who I am writing to: how about using a name that I might recognize?

    I like the topic, and this is an excellent start: you tell a great story and tell it well! But I have absolutely no idea if I should be impressed with this article or not, because this is not my field, so I don’t know what criteria relevant professionals are using to evaluate this stuff.

    So, I went on the web and found the journalistic stuff like you quote here, but then some experts, for example, http://www.marketingmagazine.co.uk/news/1155718/Six-marketing-lessons-Red-Bull-Stratos, where I learned some marketing lessons by people who claim to know the field. It is pretty interesting. They talk about the nature of the marketing campaigns and how they work on people: what attracts us to them. And they offer all this completely interesting stuff, like consumers are not idiots, but on the contrary, are exerting tremendous pressures on firms to stand for important things, like heroism, active lifestyles, commitments …

    That is, normal people like you and me just reading “the facts” basically follow the logic of “the facts” until we are led to see otherwise, and we are led to see otherwise when we find a bunch of smart people who have thought about all of this stuff … which we find on the web if we look for them. “The Facts” are impressive but basically dumb until we figure out what they mean, and what they mean, for this writer, is pretty interesting and complicated stuff, like:

    “Lisa MacCullum Carter, managing director of Access to Sport at Nike, says: ‘Underpinning the London Olympic Games was a commitment to ‘inspire a generation’. Although elite and professional sport can inspire and encourage young people, it cannot on its own increase participation levels and access. Funding is crucial, but effective change will require unprecedented collaboration and action from governments, communities, corporations and civil society.’ Many analysts believe this collaborative approach will underpin the future of marketing for good.”

    Wow!

    You get that by looking not for fact, but for what the professionals say is meaningful!

    So, I’m grateful to you for choosing this topic, and I hope you stay with it! What I’d love to see are lots of sources briefly summarized so I know what links to click and why!

    Good luck!

    PS: and be sure to send me an email with your name: I’ve seen this post in the pdfs somewhere, but having to sort through 36 pdfs to find what I could find here is, well …

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  4. Hey Max,
    your post is very interesing to me and your introduction immediately caught my attention because of your headline and this big picture of a redbull can. I like the way how you kind of tell a story, the story of how redbull became so successful. The used graph also fits into this topic. You seem to be very passionate about this topic and it sounds to me that you might want to find more about it. My question is: Is there really nothing bad to say about redbull because it is the perfect example of a good working company or did you just leave some space for another post about this topic?
    It will remain exciting to wait for next post 🙂

  5. Pingback: Is it okay to stick at nothing for success? | TheBlogBuster

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