FACULTY OF BUSINESS AND LAW
MAITF VIETNAM ASSIGNMENT HAND-IN FORM
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MA INTERNATIONAL TRADE AND FINANCE
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Do Khac Huong
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Red bull is a leading energy drink company in the world, with global sales of 3 million cans in 2006 accounting for 45% market share of the world energy drinks market. Since its foundation in 1984, Red Bull has made a significant expansion in international markets to over 130 countries and generated over €2.6 billion in turnover throughout the world employing 3,900 employees globally. Red Bull devised an innovative marketing approach to mainly target at the young adult consumers seeking an energy boost. Red Bull targets at young adult consumer aged 16 to 29, young urban professionals and students.
The market for energy drinks is characterised by the presence of specialised manufacturers as well as food and beverage giants. Key players in the marketplace include Pepsi, Coca-Cola, Danone, Hansen Beverage Company, Monarch Beverage Co., Red Bull, Dark Dog, GlaxoSmithKline, Extreme Beverages, Taisho Pharmaceuticals and Otsuka Pharmaceuticals. In terms of market share, Gatorade and Red Bull lead the sports and energy drinks segments, respectively. Most of the soft drink multinationals (like Pepsi, Coca-Cola, Danone, GlaxoSmithKline) also cover the functional drinks market.
In the overall global soft drink market the Red Bull market share is small. According to Euromonitor it is 0.8% in 2007. However, with the global sales of 3 billion cans in 2006 Red Bull reached a 45% market share of the world market in energy drinks.
2. International challenges
The 12C framework is used to identify and evaluate the key strategic challenges that Red Bull may face internationally in terms of functional drinks sector. The 12C framework consists of issues of country, channels, commitments, currency, communication, capacity to pay, caveats, contractual obligations, choices, consumption, concentration and culture/consumer behaviour. The 12C is a tool which is used to identify the constraints/bottlenecks when a firm enters a new international market. The following part, each C will individually be used to evaluate the Red Bull strategies.
Through the case study, banning from sales in countries such as Denmark and France or some certain states in Germany is a challenge to Red Bull market expansion strategies because of its unique ingredients. A rumour circulated that the taurine used came from bull’s testicles and Red Bull was liquid Viagra which gave the drink even more mystique. Red Bull also faced many obstacles in gaining regulatory approval in several countries. Red Bull is functional drink so it is often controlled by regulations on food hygiene and safety in several countries. Some countries even use this regulation to protect their home companies doing the same business. The regulations may take time to get Red Bull into a new market or slowdown the process of market expansion in some countries or even in certain region. Red Bull used to face with the shortage of aluminium to produce cans in Europe, this leads to a fast drop of sales.
Red Bull identified its key growth strategy by increasing the international distribution. Red Bull uses network of local subsidiaries setup in key...
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