How Red Bull makes money without making anything? 💸

Did you know that Red Bull actually does not manufacture the drink? It is a white-labelled version of a drink called Krating Daeng, which translates to Red Bull in Thai. The company licensed the product from its Thai manufacturer, Chaleo Yoovidhya. 

Red Bull is a cultural icon: it is everywhere, from Formula 1 teams to football clubs, and major music and sports events. They've even ventured into media production, expanding their brand influence across multiple platforms. Its slogan - ‘Red Bull gives you wiings’ is iconic. Through this article, I would like to break down the strategy of Red Bull and a few lessons we can learn. 

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▶️ The origins of Red Bull

Jet-lagged and exhausted after landing in Bangkok in 1982, Dietrich Mateschitz's luck took an unexpected turn. A local distributor, Chaleo Yoovidhya, offered him a home-brewed tonic that immediately revitalized him. This miracle drink that conquered jet lag was called Krating Daeng, and it was wildly popular among blue-collar workers and farmers in Thailand.

Impressed, Mateschitz joined forces with Yoovidhya to bring the drink to Europe – and so, Red Bull was born. Together, they invested $500,000 each, tailoring the drink to fit European tastes. They added carbonation, modified the sweetness, and adopted the iconic name based on the original Thai version: Red Bull.

The secret ingredient in Red Bull that makes it so invigorating is Taurine, a controversial component believed to have both health benefits and possible side effects.

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♟️ Red Bull's business strategy

A can of Red Bull costs $0.09 to produce and retails for an average of $1.79 – insane margins! All of their margins are invested in marketing and branding. Red Bull's entire focus is on branding instead of product innovation. 

Here is a breakdown of their marketing and positioning:

• Premium Brand: The brand has evolved into a sophisticated, premium offering. Contrasting its origins as a Thai creation designed for the hardworking blue-collar community, the reimagined product now targets a vibrant, modern generation, exuding an air of luxury and aspiration.
• Event Sponsorship: This is their key strategy to build their brand. To captivate its audience, Red Bull taps into iconic locations and platforms such as film events, music festivals, and sports gatherings. The brand has become synonymous with extreme sports like Formula One and cliff diving.
  By targeting action-packed events, Red Bull promotes its products in a space teeming with young and enthusiastic participants. 
• Extreme Marketing Stunts: While most brands use marketing as a sales-boosting tool, Red Bull takes it up a notch by setting records beyond sales figures. Enter the 'Red Bull Stratos' mission, where skydiver Felix Baumgartner was sent to the edge of space to attempt the impossible – a free fall from 38,600 km. Baumgartner captured the world's attention as millions tuned in to witness the historic moment on YouTube. The jump broke three world records, validating the brand's belief in breaking barriers. This event cost $30 million but is said to have generated $500 million in sales.

🧑‍🏫️ Lessons from Red Bull

Here are a few lessons that can be learnt from the business strategy of Red Bull: 

• Guerrilla Marketing: Red Bull is one of the few brands that do guerrilla marketing correctly. Any unconventional marketing strategy has the name of Red Bull attached to it as an example. 
• Selling customer experience: Red Bull Flugtag, is an event where participants attempt to fly homemade human-powered flying machines off a pier about 30 feet high over the sea. This entertaining spectacle offers an unforgettable experience for spectators and fosters customer engagement. By consistently sponsoring events like the Flugtag, Red Bull has masterfully aligned its edgy product with the world of extreme sports, solidifying its position as a market leader in the category.
• Word of mouth: By investing in live events, sports tournaments, and direct consumer engagement, the brand can establish a stronger connection with its target audience. Businesses can benefit from adopting a similar approach, focusing their efforts on creating shareable moments and experiences that trigger organic conversations. 
• Go Niche: Red Bull has successfully navigated numerous niche markets, garnering a diverse range of loyal audiences. From gaming communities to action sports, the brand has made concerted efforts to become a recognizable name in different sectors. Businesses can benefit from embracing niche markets, identifying segments that match their brand identity and values, and maximizing their presence in these specialized sectors.
• Celebrate Others & Not Yourself: Like Nike, the brand highlights the accomplishments of the teams they own or sponsor on their social media. Narrating stories of real people has helped them connect with the audience. Don't tell the brand story; tell the story of those who used the brand.

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