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Proposal for market leader strategy for Red Bull in India
1. Background
In 1984 Red Bull GmBH was co-founded by Dietrich Mateschitz, an Austrian entrepreneur
and former marketing director for Blendax, a toothpaste company. After visiting Thailand
in 1982 Mateschitz discovered that a drink called KratingDaeng helped cure his jet lag.
After some research, he contacted the owner ChaleoYoovidhya, a self-made Thai
billionaire who introduced KratingDaeng to the world in 1976 to strike a business deal to
sell the drink in Europe.
KratingDaeng, which means “Red Bull" in English, was inspired by the tonic drink
Lipovitan of Japan, with prime ingredient as Taurine, and was popular among Thai truck
drivers and labourers. After agreeing to the terms, Red Bull GmbH was founded by each
partner investing $500,000 of savings and taking a stake in the new company. Chaleo and
Dietrich each held a 49% share of the new company and gave the remaining 2% to
Chaleo's son Chalerm, but it was agreed that Mateschitz would run the company. The
product was initially launched in 1987 in Austria as a carbonated version. Today, Red Bull
is the most popular energy drink in the world in terms of market share selling over 5.2
Billion cans worldwide in 2012[1].
2. Red Bull in India
The Red Bull brand came to India in 2003 and has been a pioneer in the energy drinks
segment in the country. Traditionally, energy drinks have not been very popular in India.
Products such as Glucose powders (Glucon-D) were the closest products to energy drink
that the Indian consumers came to during the 80’s and 90’s. However, Red Bull has created
its space in the market as Indian consumers have gradually acquired the taste and concept
of energy drinks.
The brand has evolved over the years in India, expanding its consumer base from sports
persons, to teenagers and more recently, to party goers. It has used its conventional
branding and marketing strategies (prevalent globally) by associating itself with extreme
sports, Formula 1 etc. In India, which is a market characterized by celebrity endorsements
and attractive sales promotions, Red Bull has managed to carve to its own niche;
promoting itself through extreme sport sponsorships, quirky ads and student brand
managers.
Red Bull in India is leading the energy drinks sector, a sector which has been growing
strongly over the last decade. Significant growth both in off-trade volume and value has
been recorded for over the past 6 years, at 248.1% and 280.3% respectively[2] though the
growth rate is now slowing down to more realistic levels. Given its global position as a
market leader and the relatively uncontested energy drinks sector in India, Red Bull has
successfully cornered the market and now enjoys a market share of over 80% (energy
drinks market) with the market expected to grow further over the next five years.[3]
3. Environmental Analysis
a. 5 C analysis
● Customers
Red Bull consumers in India seek different a variety of utilities and needs from the drink.
For some it is a high dose of caffeine to sustain them through a long night of studying or
an exam; for others it provides an energy burst before a sports game and for others it is a
boost for a long drive. Red Bull is also commonly drank while socializing with friends or
as a mixer with alcohol at high end bars. Red Bull is generally purchased out of habitual
buying behaviour and is available widely in urban cities at a variety of retail shops,
chemists or at night clubs/parties.
● Context
India has a growing economy with increasing disposable income across segments; a
growing middle and upper class and an increasing consumer sentiment towards energy
drinks. This serves well for Red Bull which targets these segments. While there are no
current political and legal issues surrounding Red Bull, the drink has faced litigation last
year when the Rahul Narang Group accused the company of poaching three of its large
distributors[4]. The drink has also faced political issues in Tamil Nadu due to its associated
health concern in the past but has now been resolved.
● Company
The business model of Red Bull in India is not very different to its business models in
other countries. The major target segment is the younger population (16-35) with a
significant focus on male consumers. The company continues to leverage extreme sports
and thrill (Formula 1) as their prime unique selling point. They have one standard and one
sugar free product in India for which they maintain a rigid pricing strategy. However,
despite their global status in the energy drinks market and their “high end" factor/brand
equity; they have managed to maintain their competitive advantage in India.
● Collaborators
Red Bull has very few collaborators. The company follows a wall-to-wall production
process[5], through which it manufactures and fills the cans at the same production site,
which is located in Central Europe. All production is then exported to the rest of the world
for retail. The main collaborators for Red Bull India are its local distributors however after
recent events Red Bull is re-building its own distribution network in India and stands
relatively weak on this front.
● Competitors
There is rising competition from both international as well as domestic brands. The main
competitors in this price segment are Cloud 9, Burn (Coca-Cola) &SJ XXX. Other cheaper
local energy drink brands such as Tzinga are also present in the market however they cater
to a different segment and are not direct competitors with Red Bull.
b. Porter 5 forces
