Red Bull to Discontinue Cola and Energy Shots

Choosing to focus on their core offering – the canned energy drink  – Red Bull has decided to sell through the remaining inventory on their Red Bull Cola and Red Bull Energy Shots, and cease further production.

This may come as a surprise to certain some people, but predictable among other.  Red Bull Cola being discontinued seemed only a matter of time, as it never really gained distribution like their energy drink and faced tough competition from Coca-Cola and Pepsi and their broad array of cola offerings.  In grocery stores where it could be found, it was never placed in a position where attracted much attention from aisle shoppers and never really got a chance to succeed.  Adding to their demise was the opening price point, priced on average 50 cents higher than a 12oz (355ml) can of Coke or Pepsi.  While Red Bull products are generally higher priced based on its premium brand status, consumers were not receptive to Red Bull Cola as being a premium cola (or both Coca-Cola and Pepsi loyalists were simply that – loyal to their current cola offerings).  Red Bull Cola entered several markets to much fanfare especially in Europe and the United States, only to be discontinued starting in May 2011 in the United Kingdom.

The Red Bull Energy Shots being discontinued is more of a surprise.  Despite their late entry into the energy shots segment, Red Bull was a well-known manufacturer and thus many experts predicted that there would be carry over success from their canned energy drinks.  However, consumers may have already gotten used to look exclusively for 5-Hour Energy.  Though well-known as a energy drink brand, the competition was more fierce for Red Bull Energy Shots as many entrants were already in the category, and the shelf space for energy shots were extremely limited.  Not to mention the premium price point (50 cents higher than 5-Hour Energy and other competitors) served as a stronger deterrent given the absolute price points range anywhere from $2.49 – $3.49.

In choosing to focus on their core product – the canned energy drink – Red Bull may remain successful and possibly more profitable.  Though two revenue streams will soon be closed off, the disappearing costs to promote and maintain those two streams may provide them with more money to keep on the core product.  Their cooler door presence will just be as strong, as their unique size (8.4oz, 250ml) eliminate many competitive products from being placed side-by-side with them.

Since Red Bull will stop making energy shots, what will other manufacturers do?  The only success story in this market is really Living Essential’s 5-Hour Energy, as most products are even struggling to sell through before the expiration dates.  My guess is that in the next year, we will see more energy shots being taken off shelves, as grocery stores realize that the market is peaked.  The shelf space for these products, generally at the cashier will be available for faster moving products such as mints or gum.

Taking a break

Sorry to disappoint the followers on this week’s post, but there’s lots of stuff going on at work the past few weeks and I don’t seem to have enough time for everything so I’m taking a break from posting this week.  Tune in again next week!

Coca-Cola’s “Living” Billboard

As Coca-Cola expands its green initiative, they have unveiled a “living” billboard made out of plants.  In Manila, Philippines, Coca-Cola and the World Wildlife Foundation (WWF) has partnered to produced a 60×60 foot billboard advertisement made out of 3600 Fukien tea plants.  The plants are potted in recycled Coca-Cola bottles that contain organic fertilizers, and are watered by a drip irrigation system.  These plants can absorb 13 pounds of carbon dioxide each year, meaning that this billboard will absorb over 46800 pounds of carbon dioxide in a year (if the billboard was kept up for a full year).

This is quite an innovative advertisement by Coca-Cola and the WWF, as it really shows that both organization’s seriousness in sustainability.  Having the Coca-Cola silhouette in the center of the billboard is also ingenious, as viewers from far away can see Coca-Cola’s brand presence without having to really see any words.  So at the very least, any one that sees this billboard will recognize it as a Coca-Cola ad.  And for those that look closely, they will read the message of “This billboard absorbs air pollutants” and see that the greenery making up the bottle silhouette are actually plants.

There has not been any official word on whether this billboard will appear in North American cities, but it seems very likely given all the positive feedback and media that the ad has generated. Since urbanized cities like Toronto, New York, and Los Angeles are the most pollution-generating cities, setting up these billboards in the city’s downtown core are suitable options.

A win-win situation for Coca-Cola, showcasing their green initiatives, creativity, and getting positive media impressions not just in Manila, but elsewhere around the world.

Pepsi Goes After Santa Claus

After concentrating their efforts on Pepsi Max, Diet Pepsi, and also Sierra Mist, Pepsi is now re-focusing efforts on their flagship Pepsi-Cola in their latest advertisement.  Drumming up the cola wars again, Pepsi’s ad depicts humor by showing a summer relaxing Santa Claus partying on the beach, and opting to drink a Pepsi instead of a Coke saying, “I’m on vacation, I wanna have a little fun.”

While all this is in good humor, this Pepsi comparison ad’s potential is enormous.  Though it’s currently summertime, the ad and message has the ability to gain traction and extend into the Christmas season as well.  Coca-Cola has traditionally dominated sales during Christmas and Pepsi has been trying various strategies over the years to break the stranglehold without much success. This campaign targets Coca-Cola’s Santa Claus, which is synonymous with Christmas, and may gain some form of success with consumers.  Pepsi’s goal is to show viewers that even Santa Claus has switched to Pepsi and so should the consumers.

Should this campaign extend into the winter months, will Pepsi target other traditional Christmas Coca-Cola symbols such as polar bears and penguins?  That all depends on the success of this summertime campaign.  Massimo d’Amore, CEO-PepsiCo Beverages America, claims that Pepsi Max has grown triple digits since its initial Pepsi Diner 2.0 commercial, featuring a Pepsi Max truck driver and a Coke Zero truck driver.  At the time of writing, Ad Age reported that Pepsi has commissioned for a continuation ad to be completed.  Also, the elves featured in the summer time ad will be tweeting on behalf of the Pepsi Twitter account.  Pepsi also reports that they will have other marketing support behind this summer time effort.

However, comparison advertising that pits one company against another clearly shows the consumer who the market leaders and followers are.  After all, why would a market leader need to show an advertisement that features the follower?  And why would a market leader respond in kind with an advertisement that will give the follower the satisfaction of knowing their comparison ad was successful, and provide them with free exposure?  Coca-Cola has learned the lesson of responding to its competitor’s advertising long ago with its New Coke.  Instead, they understand that as the global leader (trademark Coca-Cola has 51% global market share compared to Pepsi-Cola’s 22% global market share) they must continue setting newer and higher standards.  The last few years, Coca-Cola’s ads have focused on gaining an emotional appeal with the consumer, while Pepsi targets Coca-Cola and without a specific message focus on taste, caloric content, or anything product-related.

We’ll see if Coca-Cola finally takes the bait from this latest Pepsi attack and attempt to revive the cola wars, but so far its been very one-sided.