How Red Bull woke up the teen market
It looks (and tastes) like medicine, but it still conquered the soft drinks trade. Now the edgy pick-me-up is moving into the grown-up world of motor racing. John Arlidge reports
The Observer, Sunday 5 December 2004
At this time of year fallen leaves shroud the carefully planned suburbs of Milton Keynes. Mist drifts in from the fields. The posh car firms - Mercedes, Volkswagen, Audi - whose UK head offices ring the Buckinghamshire town are gearing down for the winter. But last week the end-of-year gloom was lifted by the arrival of a most unlikely new inhabitant.
A bronzed and energetic Austrian, who has made a billion-pound fortune selling a drink that looks and tastes like medicine has just become the town's biggest private investor. Dietrich Mateschitz, 60, the owner of Red Bull, spent more than £60m buying up the Jaguar Formula One racing team. The thundering bull logo and 'Red Bull gives you wings' advertising slogan will replace the Jaguar logo on the wings of the silver F1 cars next year.
In a sport dominated by tobacco giants, banks and telecom multinationals, the arrival of the Austrian health entrepreneur has raised eyebrows. From Suzuka to Silverstone, everyone is gossiping about Herr Bull. How has he transformed a slim blue-and-silver can into a 200mph silver arrow? Is a mix of taurine, detoxicants, caffeine, sugar and vitamins any match for petrol? What makes Red Bull run and run?
The sugary drink was launched in the UK a decade ago. At that time no one had heard of an 'energy drink' and most people assumed Red Bull was a brand of Austrian lager. What has happened since has written a new chapter in drinks and marketing history and might be about to give F1 a much-need image boost.
Red Bull's journey to Milton Keynes started with toothpaste. Mateschitz worked in Bangkok, where he was international marketing director for Blendex, a German toothpaste-maker that is now part of Procter & Gamble. A Thai colleague, Chaleo Yoovidhya, sold a local tonic syrup called Krating Daeng - 'Red Bull'. Mateschitz tried it and was hooked. 'It cured my jet lag in seconds,' the reclusive billionaire recalls.
The idea of marketing it in Europe came to him when he read in a magazine that Taisho Pharmaceuticals, a producer of tonic drinks, was Japan's biggest corporate taxpayer. In the 1980s he quit his job and set up a company with Yoovidhya. They played around with the drink's formula, translated the name into English and applied for a licence to sell the brew in Germany and Austria.
Early taste tests were discouraging. 'Most people said it was disgusting and created a sticky mouth,' one former employee recalls. Bars initially refused to stock it, seeing it as a medicinal or health-related product, rather than a mixer.
But Mateschitz was convinced that it would be a hit with core youth groups. He guessed - correctly - that some clubbers wanted to dance all night without taking illegal drugs, such as ecstasy, and skiers and snow-boarders would enjoy enhanced performance, while hot bars would become even hotter when drinkers woke up to Red Bull as a vodka mixer.
To create a youth-oriented 'underground' feel for Red Bull, Mateschitz deliberately restricted supply and refused to advertise. He pioneered the now commonplace practice of 'viral' marketing - paying students, DJs and young opinion formers to host parties where the drink was served. The young of Austria caught the bug and, by the time the drink was launched in Germany in the early 1990s, it was so popular it sold out within days.
France and Norwway helped to bolster the drink's edgy image when they banned it on health grounds, following claims that too much caffeine could be damaging. When the drink was launched in Britain nine years ago, backed by whimsical TV advertisements claiming 'Red Bull gives you wings', this country soon became the drink's number one...
Please join StudyMode to read the full document