Submitted by: Farhan Farooq Ali
Submitted to: Sir Baber Wahab
Sports and Energy Drinks UK Market
Focusing on the Microenvironment of Red Bull
Table of Contents
2.0 Industry Analysis5
2.1 Market Analysis5
3.0 Market Focus: Red Bull13
3.1 Red Bulls Strategy13
3.2 Porter’s Five Forces13
4.0 Conclusions & Recommendations18
Red Bull’s strength seems to be based on their strategy of concentrating on its 1 Main product; the company seeks to develop a strong brand image through sponsorship of important events while focusing on its core-competences of Red Bull drink and its sugar free variant. The use of such a strong international brand means that the company’s products have powerful recognition before they are even introduced to new international markets. Young people nationwide have developed a natural affinity with the brand, finding great utility in the core benefits of the product. Careful selection of appropriate distribution channels and the creation of a brand image created around extreme events and high profile sports have helped quickly establish a premium position within the market.
Energy and Stimulant drinks have settled themselves as a fixture in the non alcoholic drinks market, the continued popularity has boosted the market’s value and despite increasing sales and increased competition, prices are still at a premium. This sector is lucrative as consumers appear to be prepared to pay a relatively high price per litre for single-serve units of the convenient energy boosting drinks. Increasing numbers of ‘Cash Rich – Time Poor’ individuals has resulted in functionality becoming a key factor, new flavours, sugar free variants and bottle changes have all been attempted by the leaders in the market. Red Bull and GSK (Lucozade) account for a large percentage of sales in the energy market and these two have created barriers to entry which limit the other firms in competition.
The Energy drink market are not just competing with each other but also the whole non alcoholic beverage market as consumers are drinking them for not only sport reasons. Many external factors have influenced the demand for this market, especially those related to the increasing popularity of fitness lifestyles and gym membership.
Possibilities for future development of the brand include diversification, changes in flavour, special editions, more/less caffeine versions could be created. The final suggestion is for the targeting of potentially lucrative social groups such as older adults and those looking for rejuvenating and stimulating properties from a drink, however this would involve alternative advertising as currently most stimulant drinks are aimed at the 18 – 25 year old market. 1.0 Introduction
The market which I shall be investigating is the sports and energy drinks market in the UK, although I think it’s important that I consider the whole market including soft drinks. This is because Sports and Energy drinks are competing with other soft drinks and sports and energy drinks are no longer only used for sports but play an important role as an alcoholic mixer and simply as a soft drink.
This report will focus on a product part of this market and I have chosen the market leader for stimulant drinks, Red Bull. I shall be examining its microenvironment and looking at the product with Porters 5 forces theory.
I will explain how Red Bull fits into the UK soft drinks market, Red Bull is part of the functional drinks market, and these are sparkling, still and dilutable non alcoholic soft drinks. They are designed to help 3 main factors.
2.0 Industry Analysis
2.1 Market Analysis
Sports and energy drinks compete with a number of other soft drink categories: * Direct competition from bottled water and from sophisticated sports nutrition...