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April 2013
Scope
This global profile focuses on the industry trends in soft drinks. All values expressed in this report are retail/off-trade in US dollar terms using a fixed exchange rate (2012). 2012 figures are based on part-year estimates. All forecast data are expressed in constant terms; inflationary effects are discounted. Conversely, all historical data are expressed in current terms; inflationary effects are taken into account. SOFT DRINKS OFF-TRADE RTD VOLUME 534.8 billion litres
Bottled Water 192 billion litres Sports and Bottled Sports and Energy Drinks Energy Water 15 billion litres Drinks 205.1 billion 16.2 billion litres Concentrates litres 43 billion litres RTD Coffee 4.5 billion litres
Disclaimer Much of the information in this briefing is of a statistical nature and, while every attempt has been made to ensure accuracy and reliability, Euromonitor International cannot be held responsible for omissions or errors. Figures in tables and analyses are calculated from unrounded data and may not sum. Analyses found in the briefings may not totally reflect the companies opinions, reader discretion is advised.
While Red Bull remains the world leader in energy drinks, it is facing growing competition from other players. TCCC in particular, with Monster in the US and Burn in Brazil, is also posing an increasing threat. These two markets are emerging as energy drinks battlegrounds and the implications are considerable for Red Bulls ability to remain the number one ranked player.
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STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS
STRATEGIC EVALUATION
Red Bull has created the global market for energy drinks, and the pioneering Red Bull brand has became synonymous with energy drinks for a large number of consumers. Red Bull remains bullish and ambitious in their corporate brand. Despite rising competition, Red Bull continues to comfortably lead the global energy drinks market in both volume and value terms. However, the threat from The CocaCola Co (TCCC) has been mounting.
World soft drinks share by off-trade 0.2% RTD volume (2012): World soft drinks off-trade RTD volume 12.4% growth (2011-2012):
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STRATEGIC EVALUATION
Additional media products include print magazines about football, motor racing, celebrity gossip and lifestyle. The company has even ventured into the mobile phone service business in Austria, Hungary, Switzerland and South Africa.
As a privately-held company, financial information is limited however the company reported net sales of 4.9 billion in 2012 and 5.2 billion cans sold, representing growth of 15.9% and 12.8%, respectively.
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Red Bull reported exceptionally strong net sales growth in South Africa (+52%), Japan (+51%), Saudi Arabia (+38%), France (+21%), the US (+17%) and Germany (+14%). Red Bull cited efficient cost management and ongoing brand investment as underpinning its growing profitability.
SOFT DRINKS: RED BULL GMBH PASSPORT 5
STRATEGIC EVALUATION
Broad geographic presence Red Bull has Red Bull has a broad established a strong, geographic presence, consistent brand image which should ensure (an independent, edgy positive long-term brand) globally. Red Bull growth even if certain is synonymous with markets reach maturity. energy drinks in many countries. Category leader
OPPORTUNITIES
Category limitations
Controversial
In overall soft drinks, The relatively high Red Bull has a limited caffeine content of Red product portfolio Bull makes the brand compared to the rising highly vulnerable to number of rivals with a regulatory control. plethora of flavour variants and categories.
THREATS
Emerging markets
New production
Competition
Red Bull is building a new Monster represents the Market maturity in Emerging markets production facility in Brazil biggest threat to Red developed markets will represent newer which is likely to make its Bull as it contains make marketing to its geographies for Red retail price more natural ingredients, core consumers harder Bulls expansion. competitive than imported which seem more than in the past. Accelerating the product prices. Building a desirable than Red Bull Constant communication marketing and site in Asia should also be for some consumers. with consumers means sponsorships in these high marketing costs. markets is a wise move. considered.
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STRATEGIC EVALUATION
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STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS
COMPETITIVE POSITIONING
Red Bull underperformed the overall energy drinks market in 2011-2012. While the companys market share of the energy drinks market in the US increased in 2012, the markets growth rate overall began to wane. Red Bull remains heavily dependent on the US for its global growth. Weakness here is reflected in the companys weakening global performance in volume terms. The company however continues to enjoy the position of number one ranked player in energy drinks globally with a 21.4% market share. In terms of absolute volume growth however, the US remained Red Bulls key growth engine in 2011-2012 reflecting growth of 96% over 2007-2012. Brazil came second in terms of absolute volume growth expanding by 608% over the review period or 48% CAGR. This market was a particular focus for Red Bull with the company sponsoring various sporting events in order to raise the brands profile.
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COMPETITIVE POSITIONING
In value terms, the companys performance was stronger in recent years although even in value terms the companys performance fell below that of the energy drinks market overall. The energy drinks market has attracted a number of other players including Monster Beverage Co, and The Coca-Cola Co (TCCC) which marketed it own brands in the category including Burn as well as engaging in a distribution alliance with Monster Beverage Co. PepsiCo had a modest presence in energy drinks with its brand Sting; however like TCCC it maintained its own alliance, with Rockstar Inc. Red Bulls sister brand non-carbonated Red Bull remains owned by TC Pharmaceutical which led the energy drinks category in China and was present in Thailand where it ranked second. TCCCs Burn was a stronger performer in Latin America over the review period, though Red Bull continued to lead the category.
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COMPETITIVE POSITIONING
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TCCC has been active throughout the review period moving beyond its core carbonates base to fruit/vegetable juice, RTD tea, bottled water and sports/energy drinks.
Red Bull as a premium player ranked much farther down in RTD volume terms. The brand is also heavily reliant on the impulse rather than grocery channel thereby discouraging multi-pack sizes.
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COMPETITIVE POSITIONING
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MARKET ASSESSMENT
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MARKET ASSESSMENT
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STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS
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Red Bull has been constrained to some extent in volume terms by its highly concentrated production infrastructure. Up to 2012, the company produced exclusively in Austria leading to high shipping and The major winner over the review period was production costs, which opened up the emerging Monster Beverage Co, which until 2012 was known markets in particular to less expensive energy drinks as Hansen Natural Corp. Underpinned by its brands. In 2012, the company announced plans to distribution agreement with TCCC the brand has build its first factory abroad in Brazil which may help made rapid gains in both value and volume terms. improve its competitiveness. The brands success has been driven by its North Rockstars distribution agreement with PepsiCo did American performance where it generated 90% of not bring in the same share gains as the Monster its volume sales in 2012. and TCCC alliance. Rockstar made few share gains In contrast GlaxoSmithKline (GSK) and its Lucozade brand have been losing market share. In volume terms, GSK has lost 2.4 percentage points in market share over 2007-2012. globally, with sales mainly coming from developed Western markets where Red Bull continues to lead. PepsiCo may have found it hard to drive Rockstar sales in these mature markets in the face of TCCCs penetration and Red Bulls dominance.
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Red Bull tries to counter weakness in key markets with new launch
While the US will lead growth in energy drinks in both volume and value terms over 2012-2017 there are clear differences among the top 10 rankings by both measures. China will push ahead of Brazil in volume growth terms. The market for energy drinks in China is more mature than in Brazil. Unit price growth in Brazil will as a consequence be higher than that in China allowing it to take second position in terms of value sales growth. In China, Red Bulls sister company TC Pharmaceutical with its Red Bull is the overwhelming category leader with a market share of 81.2% in off-trade volume terms in 2012. Markets entering the top 10 in volume terms include the Philippines and Vietnam both relatively price-sensitive markets. Per capita consumption however in both markets is higher than the global average. Energy drinks in many Asian markets have a long history of being consumed by truck drivers and labourers as a temporary energy boost. These products were in fact the original inspiration for Red Bull; a Westernised version of the potent drinks sold through by Thai pharmacists.
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The UK ranks among the top five most dynamic markets in both volume and value terms. While Lucozade remains the leader here, its fortunes have waned. Red Bull was responsible for much of Lucozades market share loss in the early part of the review period. However, later in the review period, smaller brands are increasing fragmentation. The UK is becoming increasingly fragmented as newer and smaller players have entered the market. In 2013, Red Bull launched three new flavour variants in the US market. This marks the first major launch for the brand in the energy drinks category over the review period. The new range called Edition includes cranberry-, blueberry- and lime- flavoured variants packaged in red, blue and silver cans, respectively. The move may help to invigorate consumer interest in key markets such as the UK and the US where the range of energy drinks options has increased considerably. It is recommended that the range be rolled out to other markets where market share has weakened.
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STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS
BRAND STRATEGY
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BRAND STRATEGY
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BRAND STRATEGY
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OPERATIONS
Other Businesses
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OPERATIONS
Red Bull had 8,966 employees in 165 countries as of 2012. The company, which is not listed, traditionally finances its investments from its cash flow.
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OPERATIONS
In 2011, the rumour that TCCC may look to fully acquire or partially acquire Monster surprised analysts and should have alarmed Red Bull. If Monster were to be under TCCC's full control, their combined volume sales would be very close to those of Red Bull and would certainly pose a threat to Red Bull's global leadership. Although TCCC did not acquire Monster at that time, the possibility of an acquisition has not been ruled out and the company was the subject of more takeover rumours in early 2013.
As Red Bull entered China in 2011, the company could also consider building a facility there to serve the Asian market over the medium term. There are strong arguments for combining forces with sister company TC Pharmaceutical to better penetrate Asia Pacific markets.
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STRATEGIC EVALUATION COMPETITIVE POSITIONING MARKET ASSESSMENT CATEGORY AND GEOGRAPHIC OPPORTUNITIES BRAND STRATEGY OPERATIONS RECOMMENDATIONS
RECOMMENDATIONS
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