Red Bull keeps up the pace

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 British head offices ring the Buckinghamshire town are gearing down for the winter.
But last month 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 £60-million buying up the Jaguar formula one (F1) 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 300kph 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 Britain 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-needed 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 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. 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, 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 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.

Red Bull has created a whole new drinks category. The health and energy drinks market is the fastest-growing sector of the burgeoning soft drinks market, doubling in size every year to reach £1,5-billion last year.

Red Bull is the market leader and its revenues rose 10% to £1-billion last year, on sales of 1,5-billion cans. Vodka and Red Bull is still the most popular alcoholic drink for under-20s.

But what is an irreverent Austrian doing in one of Britain’s newest towns and why is he spending a fortune buying his way into a big-brand sport in crisis?

Frustrated by the dominance of business interests over sport and the continued dominance of Ferrari, some of the big F1 teams are threatening to leave the F1 circus and form a new competition.

Some observers say Red Bull is keeping pace with its core market as it gets older. “The early adopters who made it what it is and who are still a huge market do not go to clubs any more. They stay at home and watch TV on Sunday, so F1 is the perfect vehicle to reach them.”

Can the mighty energy drink revive both itself and motor sport? For the past 10 years Mateschitz has boosted sports ranging from wind-surfing to hang-gliding, but he will need all the verve that young partygoers seek from Red Bull if he is to transform F1.

Whatever his motives for moving to grey, cold Milton Keynes last week, few would bet against a man who has taken a bubble-gum-flavoured caffeine drink and made it more profitable than Coca-Cola. — Â

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