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.