Red Bull is an energy drink brand owned by the Austrian company Red Bull GmbH. The company was founded in Austria in 1984 by Dietrich Mateschitz and Chaleo Yoovidhya and it has since become one of the most recognizable brands in the world.
Red Bull enjoys a dominant market share and, with a value of $8.143 billion, is the third most valuable soft drink brand behind Coca-Cola and Pepsi.
Understanding Red Bull’s business model
Red Bull’s business model is based primarily on experience selling. The company is associated with extreme sports such as Formula One and motocross and even sponsored Felix Baumgartner’s world record jump where he broke the sound barrier in freefall.
The company has operated the Red Bull Air Races (until 2019) and the acrobatic flying event known as Red Bull Flugtag. The company also owns teams in other sports such as NASCAR, football, and ice hockey.
No matter the sport, Red Bull targets predominantly younger males who desire the Red Bull experience and lifestyle. This means the company focuses on the perception of its brand and is less interested in productinnovation.
Below, we’ll explain the key components of Red Bull’s business model in more detail.
The Red Bull experience
When Red Bull associates itself with extreme sports, it enables consumers to feel active, excited, brave, and trendy when they consume a beverage that bears the same emblem as an F1 team, BMX rider, or skateboarder. In this way, Red Bull is both an experience and a way of life.
Red Bull products are about more than simply quenching one’s thirst. The company’s oft-repeated slogan “Red Bull gives you wings” revolves around the idea that its products provide consumers with the extra push they need to realize their dreams or conquer their fears.
The company’s affiliation with extreme sports means it is also associated with athletes who embody desirable traits that enable them to succeed in their endeavors. When consumers attend a competition, for example, they associate these traits with the brand and not necessarily with the consumption of Red Bull itself.
Premium pricing
Red Bull can charge premium prices for its products because it has created a brand image and reputation associated with quality and uniqueness.
Here are three factors that contribute to Red Bull’s premium pricestrategy:
Product differentiation and packaging
The Red Bull energy drink formula is different from competitor products which creates a perception of quality and uniqueness. The company’s exact formula is a trade secret, but the drink is known to contain caffeine, four B-group vitamins, the amino acid taurine, and mineral water sourced from the Austrian and Swiss Alps.
The iconic Red Bull product packaging also contributes to a sense of quality and uniqueness. The tall, thin, aluminum can quickly became a hallmark of the company, enabling it to stand out from its competitors and as a pioneer of energy drinks.
The can’s portability, durability, and simple, uncluttered design also add a premium feel. The same can also be said for its relatively small volume of 250ml, which Red Bull uses to communicate that its product is about quality, not quantity
Community
Many of the sports Red Bull sponsors are niche in the sense that consumers find it easier to connect with lesser-known (and thus more relatable) athletes. Others sports that the company affiliates itself with, such as football, have broader appeal but passionate fan bases.
In either case, the company creates a sense of community and belonging among those with similar interests. This is supported by a global network of sponsored athletes and a strong social media presence that creates a perception of exclusivity around Red Bull products.
Key takeaways:
Red Bull is an energy drink brand owned by the Austrian company Red Bull GmbH. The company was founded in Austria in 1984 by Dietrich Mateschitz and Chaleo Yoovidhya and it has since become one of the most recognizable brands in the world.
Red Bull’s business model is based primarily on experience selling. The company is associated with extreme sports such as Formula One and motocross and also owns various professional sports teams.
Red Bull targets predominantly younger males who desire the Red Bull experience and lifestyle. When they consume Red Bull, they align themselves with extreme sports athletes who embody desirable traits. The company’s business model is also supported by product differentiation, product packaging, and a community that fosters exclusivity.
Coca-Cola follows a business strategy (implemented since 2006) where through its operating arm – the Bottling Investment Group – it invests initially in bottling partners operations. As they take off, Coca-Cola divests its equity stakes, and it establishes a franchisingmodel, as long-term growth and distributionstrategy.
Coca-Cola’s top investors include Warren Buffet’s company, Berkshire Hathaway, with 9.23% of shares, and other mutual funds like The Vanguard Group, holding 7.9% of shares, and BlackRock owning over 6.45% of shares of the company. Other individual investors like Herbert A. Allen, director of The Coca-Cola Company since 1982, and Barry Diller, Chairman of the Coca-Cola board since 2002. And former CEO Muhtar Kent.
Coca-Cola’s Purpose is to “refresh the world. make a difference.” Its vision and mission are to “craft the brands and choice of drinks that people love, to refresh them in body & spirit. And done in ways that create a more sustainable business and better-shared future that makes a difference in people’s lives, communities, and our planet.”
Coca-Cola is the market leader of the soft drink industry. It is also the most widely recognized brand, with a Business Insider study revealing that a staggering 94% of the world population recognizes the red and white logo. However, Coca-Cola faces significant challenges with increasingly health-conscious consumers and less access to water resources.
The Coca-Cola Company is an American multinational beverage corporation founded in 1892 by pharmacist Asa Griggs Candler. Many consumers associate the company with its signature soda in a red can or bottle. In truth, however, The Coca-Cola Company owns a plethora of soft drink, juice, tea, coffee, and other beverage brands.
The Coca-Cola Company has 21 different billion-dollar brands or brands that generate more than $1 billion or more in revenue each year. The company also sells its products in nearly every country in the world, with Cuba and North Korea the only two countries where it is not sold officially. What’s more, the Coca-Cola brand is worth $87.6 billion, making it one of the most valuable among all companies. Though these figures allow Coca-Cola to enjoy market dominance in many countries, the company is nevertheless subject to intense competition.
PepsiCo was founded in 1902 by American pharmacist and businessman Caleb Bradham as the Pepsi-Cola Company. Bradham, who hoped to emulate the success of Coca-Cola, marketed the beverage from his pharmacy and registered a patent for its recipe the following year. Today, Pepsi is a global company with a portfolio of 23 billion-dollar brands, or brands earning more than $1 billion in annual revenue. Sixteen of these brands are beverage-related, while the remaining seven are associated with snacks and other food products.
In 1965, PepsiCo acquired Frito-Lay in what the chairmen of both companies called a “marriage made in heaven”. The resultant company transformed PepsiCo from a soft drink organization and set it on a path to becoming one of the world’s leading food and beverage companies. Today, PepsiCo claims to operate in more than 200 countries and territories around the world with seven distinct divisions and many successful brands.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
