One of the markets I discovered the amazing vitality of, was that of energy drinks.
Basically, for me, the energy drink market was limited to Red Bull, Burn and a few alternatives which put millions of Euros in advertisement. What I discovered at SIAL was that the market was much broader than what I thought. What I saw is a low-tier invasion and a cost leadership strategy adopted by many players.
One good example was No Fear which was launched 8 months ago in the UK. According to Glenn Hudson, the Sales and Marketing Director, 5 millions cans were sold in the UK for 1€ each (thus much cheaper than the Red Bull equivalent). In terms of communication No Fear was using classical elements of Red Bull communications such as extreme sport (see picture below).
No Fear communicates on extreme sports … like Red Bull
The innovative part was more in the packaging (reusable seal although Burn launched this seal already 2 years ago) and in the price (1€) which offers a “low cost” alternative to the Red Bull premium.
Another innovative product in the same category was “La Bomba” (made in Austria as its name does not suggest). I haven’t tasted it but found the format very interesting. It looks like a hand grenade and you will notice the similarities in terms of communication with other brands in the same category.
“La Bomba” looks like a hand grenade. Not very ethical but it depicts pretty good the values of the brands in this category.
My take:
Low-tier entrants are invading the market and eventually Red Bull will have to communicate on the authenticity of its recipe. All products taste the same, promise the same, and differentiate only in secondary aspects which contribute only marginally (in my opinion) to the customer experience. The only way for Red Bull to keep its share of the market is to remain the “owner” of the events it sponsors. As soon as new entrants will have enough money to invest in such high-visibility event Red Bull may experience a drop in its sales.
Posted in Strategy.
