Red Bull Expands Editions Line-Up

The expanded Red Bull Editions Line-up.  From left to right, Orange, Cherry, Red, Blue, and Yellow.  Image courtesy of cspnet.com.
The expanded Red Bull Editions Line-up. From left to right, Orange, Cherry, Red, Blue, and Yellow. Image courtesy of cspnet.com.

It seems that Red Bull has found more success introducing energy drinks than energy shots or cola, as their recent launches like the Red Bull Total Zero and the three Editions flavors have fared much better.  So it should come as no surprise that the energy drink behemoth continues building sales momentum behind their energy drink assortment.  At the 2014 National Association of Convenience Stores (NACS) show, Red Bull announced three new members to the Editions family.  Joining the Red (Cranberry) and Blue (Blueberry) Editions are the Yellow (Tropical Citrus), Orange (Orange), and Cherry (Cherry) energy drink flavors.  The Orange & Cherry options contain zero calories and zero sugars, while the Yellow option returns with nationwide availability after a two month test exclusively with 7-Eleven.  These new flavors will be available starting mid-February in 355ml (12oz) cans, while the 250ml (8oz) cans will transition to a multi-pack sku.

Among the three new flavors, Cherry may be the only true new addition to Red Bull’s portfolio.  The Yellow flavor was brought to market during the 2014 summer months, exclusively with 7-Eleven.  It was known as the Summer Edition to temporarily complement their Red, Blue, and Silver drink line-up from July to September.  Meanwhile, the Orange flavor may have previously existed in limited U.S. markets under the name of BULL Energy.  BULL Energy had different packaging, with limited references to Red Bull, and was available exclusively across soccer venues (as an exclusive product for the New York Red Bulls, the city’s soccer team).

Related Post: Red Bull Celebrates Summer with New Flavor

Regardless of the flavors being truly new innovations or otherwise, this marks an accelerated pace of product introductions for Red Bull than previously recorded.  Before 2012 (year of Red Bull Total Zero launch), it was back in 2009 when Red Bull added to their product line-up, with an unsuccessful expansion into energy shots.  Since the 2012 launch of Total Zero, three new items were added in 2013 (Red Bull Editions) and now three more in early 2015.  Although their pace doesn’t match that of Monster Energy or Rockstar Energy (which launches multiple new products annually), Red Bull’s more recent product expansion activities indicates their commitment to giving brand loyalists more choices.  And this ultimately lets consumers reward Red Bull with more dollars.

Courtesy of BevNet.com – the new Red Bull “Bull” Energy Drink.
Courtesy of BevNet.com – the new Red Bull “Bull” Energy Drink.

With these new introductions, it appears that Red Bull may not be done with their product expansion.  The Orange and Cherry flavors are decidedly different from the Red, Blue, and Yellow items, containing zero calories and zero sugar.  In essence, these two skus align closer with Red Bull Total Zero.  In which case, Red Bull may explore opportunities to build out their “Zero” product line-up.  Would the energy drink manufacturer launch both the Red and Blue flavors under the Zero portfolio?  Also mentioned in the press release was the Editions will be available in single servings (355ml/12oz sizes) and multipack servings (4-packs of 250mls/8oz).  Would Red Bull consider up-sizing some items even more, to join the original Red Bull Energy Drink in a 473ml (16oz) size?  Even yet another option would be exploring additional flavors to bring to market.  Beyond the current flavors, would Red Bull add to the Editions line-up with a Pink (lemonade), Peach (peach), or Purple (grape)?

Related Post: Red Bull Launches New Product: BULL Energy Drink

Incremental offerings for the Editions line-up certainly presents Red Bull with opportunities and risk.  It’s worth noting that Red Bull has quietly swept the Silver (Lime) edition under the rug.  It’s not clear whether Silver is being discontinued, but keeping the current Red Bull flavor portfolio at five flavors is a sound decision.  As long as energy drink consumers enjoy Red Bull’s new products, the energy drink company will continue to deliver popular innovations.  Today, the Red Bull company looks very different from the one back in 2009.  After a period of failed experimentation, a string of successful innovations has helped Red Bull take back control of the energy drink market.

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5-hour Energy’s Quest for New Growth

The 5-Hour Energy Shot Line-up
The 5-Hour Energy Shot Line-up

It seems that the craze over energy shots have died down since 2012 and left 5-Hour Energy as the last company standing.  That shouldn’t be a surprise since existing consumers were fiercely loyal to the brand, to the extent that offerings from energy stalwarts like Red Bull and Monster failed to sustain sales in this segment.  After winning the battle for energy shot supremacy, 5-Hour Energy still faced challenges toward reaching a wider array of consumers.  The energy shot manufacturer need to reach other demographics to continue growing.  That spawned line extensions to reach women, as well as sampling events to reach seniors. This past summer, the company ran a “Yummification” campaign to leverage 5-Hour Energy as a mixer (BevNet’s Ray Latif has an in-depth look at the campaign here).  While all companies have growth barriers, what has 5-Hour Energy done differently to overcome these growth challenges?  And beyond its success, what other opportunities exist for them in the foreseeable future?

It would appear that targeting women and seniors are components of an overarching 5-Hour Energy growth plan, and the strategic objective is to increase consumption.  Reach new demographics isn’t all that different from what other companies do, so catering to women and seniors are not all that unique.  What is unconventional is their “Yummification” campaign.  5-Hour Energy recognized that taste was a blockage that would not be solved despite their efforts to highlight product benefits.  The “Yummification” campaign leveraged fans’ creativity in a contest to create recipes for mixing 5-Hour Energy with other beverages (mainly non-alcoholic ones) to lessen the medicinal taste.  As a side benefit, this contest required submissions through YouTube helped generate a lot of media exposure.  Beyond media impressions, the campaign showcase new usage occasions for 5-Hour Energy.  Contest submissions advertised concoctions to refresh the user during athletic training, waking up, and gaming among many others.  Athletic training, waking up, and gaming are occasions typically paired with other refreshments, such as sports drinks, coffee, and juice & water.  Energy drinks – let alone energy shots – seldom enter the conversation as refreshments during these times.  However, it looks like that will change following the success of their “Yummification” campaign.

5-Hour Energy's Yummmification Contest.  Courtesy of blog.5hourenergy.com.
5-Hour Energy’s Yummmification Contest. Courtesy of blog.5hourenergy.com.

Beyond the campaign’s success, it seems 5-Hour Energy has uncovered business opportunities that they were previously unaware of.  Serving as an ingredient as well as a standalone product gives them many more opportunities to sell itself.  Beyond the regular activities to feature the product as a strong standalone product, mixing the shot with other beverages now gives 5-Hour Energy many cross-promotion and marketing opportunities.  5-Hour Energy could try securing displays in the juice aisle to forge a stronger bond with the juices that could be mixed with their product.  Or secure displays in the coffee aisle to convert or steal coffee consumers.  Regardless of displays or other in-store activation tools, many opportunities have emerged to continue delivering growth momentum.

Judging by the potential that this campaign could provide to 5-hour Energy, it’s a surprise it took them so long to come up with it.  It may be the fact that the segment was riding a hot growth trend that nullified the need for marketing support.  Or that negative media surrounding energy drinks required more immediate attention than developing a sustained growth strategy.  Whatever the case, the campaign has now happened and translated fantastic success.  The one downside is that the campaign won’t be repeated, as said by Brandon Bohland, a special markets manager at the company.  Which means that the recipes submitted for the campaign are the only ones that will exist for the foreseeable future, until 5-Hour Energy creates other contests calling for recipe creations.

Visit 5hourenergy.com/yummification to see the videos and recipes for their Yummification contest.

Big Red Buys Xyience, Ends UFC Partnership

Xenergy Lineup

It seems the beverage industry continues to go through some form of consolidation.  Big Red Inc. – one of North America’s Top 10 beverage organizations – has acquired Xyience effective immediately.  Xyience – one of the more well-known energy drink brands through their sports sponsorships – now joins a drink portfolio that includes Big Red Soda, Hydrive Energy Water, Nesbitt’s, and Thomas Kemper Soda.  While many things may change for Xyience in the future, one thing has already changed as a result of this acquisition: Xyience has ended its UFC sponsorship.  Will ending this sponsorship hurt Xyience’s growth among their core demographic?  How else will their communicate to this group of consumers?  Will the gains from being part of Big Red’s system outweigh Xyience existing as a standalone energy drink company?  What benefits Xyience in this arrangement?

One major factor: Big Red’s national footprint.  Xyience had been working well to gain distribution, winning more doors and regions over the past few years.  However, most of these distribution gains have occurred along the coasts.  There are many areas within the U.S. that Xyience products cannot be found.  Joining Big Red gives Xyience national distribution by piggybacking off of Dr Pepper Snapple Group (DPSG), which is a national distributor and delivers to three-quarters of all Big Red retail accounts.  This change alone provides significant gains for Xyience, allowing the energy drink to challenge Red Bull, Monster, and Rockstar across more geographies.  The best part is that this is organic growth, where Xyience can rely on their brand name to help them do some of the work.

Beyond distribution gains, another growth opportunity for Xyience would be to broaden its target audience.  While the energy drink manufacturer owns a niche following among a select group of consumers, appealing to more consumer groups will help this brand evolve from its current state to a much larger energy drink player.  Hence ending their UFC sponsorship.  Gary Smith – Big Red’s CEO – said as much:

“I’m just gonna soften it (their image) up a little bit, make it a little less hardcore than the image that it’s got today.”

Ending the sponsorship won’t immediately alienate their niche consumers, but provides the opportunity to reach other consumer groups.

If managed properly, Xyience may be primed for explosive growth following its Big Red acquisition.  The brand is very recognizable and will be available in more places where consumers will recognize them.  And in the distant future after new consumer marketing content is built, they will certainly be challenging Red Bull, Monster, and Rockstar for share of mind in addition to share of shelf.

Coca-Cola Builds a Monster

Image courtesy of brandchannel.com
Image courtesy of brandchannel.com

Looks like Coca-Cola realizes what it’s good at and what it isn’t good at.  Their increased stake in Monster Beverage proves as much.  With $2.1 billion invested, Coca-Cola now owns 17% equity in the energy drink behemoth, and in turns switches up their product portfolios.  Coke will give Monster their own acquired or homegrown energy drink brands, which includes Nos, Full Throttle, and Burn among many others, while Monster trades them their non-energy drink products, such as Hansen’s Natural Sodas & Juice Products, Peace Tea and Hubert’s Lemonade.  This deal brings together the world’s largest soda manufacturer and the U.S.’s largest energy drink manufacturer.  Although both sides got a great win out of this, but who needed this deal more – Coca-Cola or Monster?  Let’s start by seeing what each side actually gets out of this arrangement.

For Coca-Cola, acquiring a larger stake in Monster and then trading energy drinks for teas & juices serves as a win in itself.  With consumer habits and preferences changing, fortifying their product portfolio to keep pace with these changes was a necessity.  And with key brands generating bad press lately (think Diet Coke slogan fiasco), Coca-Cola could not afford to keep beverage products that carry high negative publicity potential.   Nos, Full Throttle, and the like most certainly qualify given the category requires caffeine content regulation following linkages to caffeine poisoning.

Energy drinks didn’t necessarily fit into the brand image that Coca-Cola wanted to sustain.  Energy drinks focus around an extreme sports lifestyle, with key sponsorships across mountain biking and motor biking.  Distancing the brand from energy drinks better promotes Coke’s image as a family-oriented product manufacturer.  Furthermore, their marketing acumen is better leveraged across Monster’s non-energy products given Coca-Cola’s existing strength across juices and teas.  Coca-Cola has already made a strong name for itself behind Minute Maid, Simply, Odwalla, Nestea, and Honest Tea.  Giving up energy to return focus to juices and teas helps Coca-Cola stay sharp and work on what they’re good at.

Hubert's Lemonade, now part of the Coca-Cola family.  Will this lemonade brand grow exponentially?  Image courtesy of hansens.com
Hubert’s Lemonade, now part of the Coca-Cola family. Will this lemonade brand grow exponentially? Image courtesy of hansens.com

For Monster Beverages, this deal unlocks a stronger global distribution network to grow their product base.  They’ve also added some larger name-brand energy drinks to complement Monster.  A strong competitor like Nos now becomes a fantastic ally.  Full Throttle owns a cult following despite Coca-Cola’s neglect and has a very good chance of being resurrected.  This arrangement gives Monster a wide assortment of products to target energy drink consumers, both locally and internationally.

Monster has also done a better job at marketing energy drinks than Coke because they’ve invested in resources to build out an entire lifestyle.  Energy drinks are more integrated into a consumer’s lifestyle than some other beverages, given their wide target in terms of drinking occasions.  The soda drink manufacturer was not prepared to build out a 24/7 lifestyle like how Monster, Rockstar, and Red Bull have.  Though Monster’s success isn’t a defined blueprint, they already have the infrastructure in place for one energy drink and this could be scaled up for other energy drinks.

It’s really hard to say who needed this more though Coca-Cola benefits more in this new arrangement.  The soda maker had more to lose because they were never going to catch Red Bull, Monster, or even Rockstar with their homegrown products.  Giving up distribution bought them expertise and healthy beverage brands.  Similarly, Monster’s true success existed in the energy drink segment, so much that they even changed their company name to halo off some brand equity.  Their strength in energy drinks would have prevented them from properly developing their nonenergy product portfolio.

Regardless of who benefited more, this only proves that larger companies must take creative approaches to keep growing.  In the past, it was about building strong brands.  Now, it’s about buying a brand that’s already been built, and making it stronger.

Red Bull Celebrates Summer With New Flavor

The new Red Bull Summer Edition is available exclusively at 7-Eleven locations across Canada and the U.S.
The new Red Bull Summer Edition is available exclusively at 7-Eleven locations across Canada and the U.S.

Building on their momentum of the Red Bull Editions, the energy drink manufacturer will launch a new flavor exclusive to 7-Eleven locations in Canada and the U.S.  Aptly named the “Summer Edition”, the drink’s packaging is a sunny-yellow colored 12oz (355ml) can.  The tropical fruit-flavored drink adds to the Red Bull Editions line-up of the Red (cranberry), Blue (blueberry), and Silver (lime) flavor offerings.  7-Eleven has exclusivity of the Summer Edition in July and August, with a consumer promotion running until September 2nd (per the corporate 7-Eleven news release).  After that, no guarantees whether this becomes available across other retailers or it is truly an exclusive, limited-time offering.  If history proves to be repeated, then the Summer Edition will be here to stay.  Red Bull had previously launched their Red Bull Editions exclusive to 7-Eleven in March, followed by availability at other retailers a few months later.

It’s not the first time beverage companies have partnered with 7-Eleven for exclusive offerings.  Most recently, Gatorade had launched their Gatorade Fierce Green Apple flavor exclusively with the convenience retailer.  The results of that launch is detailed in this Pepsico news release.  The proven success of exclusive launches help 7-Eleven secure more preferred agreements with other beverage manufacturers.  After all, the convenience retail channel generates healthy sales and even healthier profit margins.  And with 7-Eleven adding more retail locations across North America, they certainly have the clout to command more customized products.  For Red Bull, this arrangement is preferable since it helps the energy drink manufacturer lock up more valuable shelf space in the nation’s leading convenience retail chain.  In addition, this also allows them to focus their advertising support behind one product at one retailer, helping to drive a stronger, more focused message.

Red Bull has previously launched the Red Bull Editions exclusive to 7-Eleven before opening it up to all retailers.  Courtesy of flippies.com
Red Bull has previously launched the Red Bull Editions exclusive to 7-Eleven before opening it up to all retailers. Courtesy of flippies.com

In BevNet.com’s article on the Red Bull launch, the publication detailed that Red Bull is slower to launch new products relative Monster Energy, leading to slower sales growth (link here).  The comment is not without merit, as it appears that Red Bull’s sales are more reliant on existing drinks rather than new innovations – especially with a innovation history that includes unsuccessful attempts to diversify with  Red Bull Cola and Red Bull Energy Shots.  However, their recent product launches came from an area where they are the clear leaders and have been quite successful.  And with fewer launches, Red Bull is able to put more attention into each launch, and ensure that it receives full support across media outlets as well as.  Case in point: their launch efforts behind Red Bull Total Zero and the Red Bull Editions have been well executed with media and in-store support.  Even their BULL Energy Drink has garnered strong attention despite catering the beverage to a highly specific market.

The lower frequency also helps Red Bull convey a stronger brand presence that coincides with their premium pricing.  Fewer launches highlight a prestige that will be harder to sustain if launches become fast and frequent.  So with the Summer Edition now available in 7-Eleven, let’s see how Red Bull celebrates with their Summer Edition.  It won’t be forever until they have another product launch, but it will surely be after they make sure the Summer Edition is successfully entrenched with  the customers and consumers.

5 “More” Questions with Hard Rock Energy’s David Drow

Hard Rock Energy Image

When people think of the energy drink category, they typically think of Red Bull, Monster, and Rockstar.  To a broader extent, consumers also consider Nos and Xyience.  All of these companies have had to build their brand from the ground up, with very little leverage in the first place.  How would the product’s success change if they had some brand equity they could leverage?  We encounter such a case with Hard Rock Energy, an energy drink licensed through Hard Rock International – the themed restaurant chain with rock and roll memorabilia – to market energy drinks.

BevWire recently connected with David Drow and Brent Campbell for an interview.  David Drow is the Chief Executive Officer and Brent Campbell is the Chief Operational Officer of Enterprise Beverage Group, the licensees for the Hard Rock Energy brand of energy drinks.  What initially was “5 Questions” spiraled into many subsequent questions as BevWire wanted to learn more about the business aspects of Hard Rock Energy.  The below is the second part of the “5 Questions” interview with David Drow.  We will be covering the brand’s marketing tactics, test market results, and David’s views on growth opportunities as well as growth barriers.  Click here for last week’s “5 Questions” piece.

BevWire: How successful has Hard Rock Energy been in its test markets of Chicago and Florida?  Has there been strong trial and subsequent repeat purchases?

David Drow:  It is still too early to tell at this point.  Initial sales have done well with limited support.  Our first test stores went “live” in early December and have done very well with the product.  We have enjoyed 15% share of energy drink sales and have had multiple repeat customers.

BW:  For subsequent expansion beyond Chicago and Florida, will cities with Hard Rock branded properties taken precedent over ones that do not have Hard Rock branded properties?

DD:  The initial test market was originally Chicago only.  It was selected with a couple of key criteria in mind: there was a local Hard Rock presence (this guaranteed brand awareness and would also allow us to utilize those resources in the launch), Chicago has a sizable population base that would allow us to gauge the acceptance of the product, and the population is considered a microcosm of the remainder of the country.  South Florida was added to the initial launch as a way to support our Seminole Tribe of Florida partners.  And let’s face it…. It’s a lot more pleasant marketing a beverage in the dead of winter in Miami than it is Chicago (no offense Chicago!)

BW:  How do you plan on reaching your core demographic target audience (males 18-24)?  What type of specific grassroot and social media tactics will you be implementing that caters to this audience?

DD:  While this is our core demographic, the category is ever expanding.  My direction to my team is “everything social”.  All marketing must have some type of social media exposure for each event or promotion.  We are focusing on music and music related events.  It is not only a good fit for the brand, it plays a major roll in the lives of our key customers.  We are developing both a strong social media presence and a robust website at hardrockenergydrink.com.

BW:  With regard to “everything social”, does that mean Hard Rock Energy’s marketing tactics differ differently between Twitter, Facebook, Instagram and other social tools?

DD:  Our goal is to utilize each social media vehicle to capture certain niches within our target demographics.  Hard Rock Energy’s website and mobile sites are our central hub for all main/universal information on our product and brand.  The Facebook page is used as the main communicator for large-scale communications.  We utilize Twitter for communication to capture current industry trends as well as generate a broader international reach; as we’ve noticed that most of our international audience is on Twitter.  Instagram is utilized to gather information on what the current trends are within the industry as far as collateral goes; but is also our “wild card” resource for reaching our audience.

BW:  What do you see the top three biggest opportunities toward growing of Hard Rock Energy?

DD:  The energy drink category continues to grow, yet there are very few new entries with the power and branding of Hard Rock.  There also appears to be some fatigue with the two majors.  As such, consumers appear poised to consider alternatives.  The levels of interest both domestically and internationally is greater than I ever anticipated.

BW:  What do you see the top three biggest challenges toward growing of Hard Rock Energy?

DD:  Competitors with unlimited budgets, regulatory intrusion, and growing too fast.  We need to ensure support to our partners.

Great insights on this second part of the “5 Questions” with David Drow.  You’ll notice it was actually six questions among this great conversation with David.  As we touched upon the core demographics and how the company’s marketing plan, it’s definitely an indication that the energy drink is focused on building the lifestyle brand that connects with the consumer both online and offline.  Understanding the top barrier to growth of competitors with unlimited budgets ensures that David’s team focuses on delivering success at the most tactical of levels first.  And leveraging on the presence of Hard Rock properties certainly helps as a competitive advantage.  A great “walk before run” recognition to grow their business.  Hopefully we will see this energy drink brand in Canada soon enough.

Thanks again for David’s time, and Brent for arranging this interview!

5 Questions with Hard Rock Energy’s David Drow

Courtesy of amazonaws.com

When people think of the energy drink category, they typically think of Red Bull, Monster, and Rockstar.  To a broader extent, consumers also consider Nos and Xyience.  All of these companies have had to build their brand from the ground up, with very little leverage in the first place.  How would the product’s success change if they had some brand equity they could leverage?  We encounter such a case with Hard Rock Energy, an energy drink licensed through Hard Rock International – the themed restaurant chain with rock and roll memorabilia – to market the beverage.

BevWire recently connected with David Drow and Brent Campbell for an interview.  David Drow is the Chief Executive Officer and Brent Campbell is the Chief Operational Officer of Enterprise Beverage Group, the licensees for the Hard Rock Energy brand of energy drinks.  What initially was “5 Questions” spiraled into many subsequent questions as BevWire wanted to learn more about the business aspects of Hard Rock Energy.  The below is the first “5 Questions” interview with David Drow.  We will be covering the brand’s market differentiation, choice of test markets, and expansion plans.  Next week, BevWire’s interview with Hard Rock Energy will touch on marketing tactics, test market results, and David’s views on growth opportunities as well as growth barriers.

BevWire: What differentiates Hard Rock Energy from other energy drinks on the market like Red Bull and Monster?

David Drow:  When designing the flavor profile, we tried to formulate a product that could be identified as an energy drink, but have a more pleasant taste.  Also, the can graphics prominently display the iconic Hard Rock logo.  At 100mg of caffeine per serving, we have about 25% more caffeine than our major competition.  Our original product is pale blue in color, is slightly sweeter than Red Bull and not as syrupy as Monster.  The carbonation is slightly less than both major brands as well.  Our Paradise Punch has a tropical fruit flavor.  It is pleasant to drink on its own or as a mixer in “adult” beverages.  The Sugar free has 6 calories per serving, no color additives (the liquid is clear) and we use Sucralose as the sweetener.

BW: Hard Rock Energy is currently available in the regional test markets of Chicago and Florida, what do these two test markets have in common?

DD: Both Chicago and Miami (South Florida) markets have substantial population bases and have Hard Rock branded properties.  The Chicago market is really a snapshot of America at large.  They have a big city life, but Midwest culture and values.   Miami (S. Florida) has international flair and culture.  It makes for a good international test without leaving the US.

BW: How soon would international (Canadian) expansion appear on the Hard Rock Energy radar?  And if it’s not international expansion, what are some other test markets that you are planning to enter?

DD:  Upon completion of the two test markets, we intend to seek approval for international expansion to coincide with our continued domestic expansion.  Canada is certainly on the radar for expansion.  On the continued domestic expansion front, we will continue to expand into all major US markets and have personnel presence in each market area.  Internationally, we are working with co-manufacturing partners to develop products and distribution.  The Pan Pacific region looks attractive, as does most of the European market.

BW: How has Hard Rock International’s equity helped leverage growth so far, and how do you plan on leveraging this equity for future growth?

DD: Distribution and acceptance at major retail are the lifeblood of consumer products.  The introduction of any new product encounters intense scrutiny before distributors and retailers will take a product.  The Hard Rock brand has opened doors that would be closed to most new products.  Overseas production will play a big part of future growth.  We also intend to utilize the Hard Rock properties for events and promotions.  What better way to support the brand, then to send people to Hard Rock venues all over the globe?

BW:  Beyond the Original, Sugar Free, and Paradise Punch flavors, is Hard Rock Energy exploring other flavor extensions?

DD:  While we will be looking at line and flavor extensions, we feel that we really need to focus on these three products to create product awareness in the category.

Certainly a great first “5 Questions” session with David Drow.  It shows that taste is one of the most critical defining attributes of the product.  Even with a strong lifestyle brand in Hard Rock International, Hard Rock Energy is building the product’s awareness and momentum the right way, through representative test markets.  Tune in next week for the second part of my interview, where we explore David’s views on growth potential and challenges, marketing tactics.

Thank you David for spending the time to answering the questions, and Brent for arranging the interview!

evian Replaces Coca-Cola With Red Bull

Courtesy of designtaxi.com
Courtesy of designtaxi.com

It appears that Coca-Cola and evian have both outgrown their distribution partnership.  Come July 2014, Coca-Cola will stop distributing evian waters (read the full story here).  Consequently around that same time, some U.S. cities may see evian being distributed off Red Bull delivery trucks (that story found here).  While Coca-Cola & evian describe the agreement’s termination as an opportunity to refocus on their core businesses, it may simply be Coca-Cola wanting to re-focus on their own water brand as smartwater continues to build sales.  With this adjusted partnership, who wins and who loses?  Coca-Cola, evian, or Red Bull?

It would seem that Coca-Cola is constantly looking at ways to ensure delivery truck space is stocked with as much Coca-Cola-owned refreshments as possible.  Coca-Cola appears to be re-evaluating all their distribution agreements in order to locate new growth opportunities.  It was only two years ago in 2012 that Coca-Cola ended a distribution agreement with Nestea to focus their attention on Fuze – which so far has left consumers upset since Nestea is not as broadly available.  Fuze also appears to have failed to expectations given consumers still prefer Nestea.  Has Coca-Cola been supporting Fuze with the appropriate level of marketing?  This indicates that while in-house products (Fuze, smartwater) may offer better profit margins, licensed products (Nestea, evian) may perform better given a stronger sales record (that was built with Coca-Cola’s distribution network).  Will Coca-Cola look to remove Monster Energy from their distribution infrastructure as well?  While smartwater may have stronger sales than Fuze, the question remains whether smartwater will be able to outperform evian.  If smartwater outsells evian, then Coca-Cola would have benefited from the distribution change-up.  The same logic would apply for all other products that Coca-Cola distributes.

For evian, this change comes at a time when the company is in the midst of introducing new product packaging.  The fact that the premium water brand needs to revitalize their packaging to stay competitive is disheartening.  This is a sign that evian must re-align some aspects of their product (this time it’s the packaging) in order to re-communicate the product benefits to the consumers.  With distribution changes occurring simultaneously, the impact is amplified and more detrimental. Consumers looking to repurchase evian waters may find fewer selection in addition to not recognizing the 14-year-old evian plastic bottle.  Retailers may be less confident in evian, observing so much change in such a short time.  However, Red Bull is a strong partner and is building up their own distribution network.  With the partnership agreement ending in July 2014, this still gives evian a little time to build more infrastructure to replace Coca-Cola’s footprint.  evian appears to be disadvantaged in this new arrangement, given the fragmented nature of their distribution system.  Even if evian could establish the same footprint as before, they still must compete against smartwater for shelf space given the opposite sales trends of these two premium water brands.  Still, evian is part of The Danone Group and would be able to leverage the strength of their yogurt distribution network.  Possibly weaker distribution, but evian should be none the worse off.

Courtesy of asiantrader.biz
Courtesy of asiantrader.biz

For Red Bull, this is an opportunity for them to improve their business through new opportunities.  While their innovation track record outside of energy drinks has been poor, the sales of their energy drinks has been steady and growing.  The fact that the energy drink manufacturer has returned to their roots among product innovation, they have also been creative to find new revenue-growing opportunities.  This is where distribution becomes that great growth opportunity.  As they deliver energy drinks to their retail customers, they can now satisfy more of the retailer’s beverage needs by bringing them evian as well.  While evian is the first manufacturer to explore product delivery through Red Bull, there are other product manufacturers that may leverage Red Bull’s distribution infrastructure in the future.  If Red Bull can expertly manage the evian distribution relationship and help the premium water brand regain sales momentum, then Red Bull stands to have many other growth opportunities in the future.

It would appear that Red Bull and Coca-Cola have more upside than evian in this new arrangement, but upside nonetheless.  It would also be important for other beverage manufacturers to take notice of what is happening here.  Would evian be better off approaching Pepsi to see if they can leverage a partnership with them?  And if you’re Monster Energy, this offers short term gains with more truck space.  Question is, will Coca-Cola one day end their distribution agreement to focus on Nos and other Coca-Cola owned energy drinks?

Red Bull’s Story of Thanksgiving

Red Bull’s “The Story of Thanksgiving”. Courtesy of ispot.tv.

Has you seen any Red Bull’s “Gives You Wings” commercials?  Of course you have, they have been running these cartoon-like commercials over the last few years.  Their latest take “The Story of Thanksgiving” puts a little humor on the how turkey became the holiday’s traditional meal.  A very simple and humor-filled ad, yet it gets the message across beautifully.  Here’s the ad below:

Similar to hearing the five-note melody define Coca-Cola, or seeing the golden arches define McDonald’s, most people are aware that this is a Red Bull commercial once they see the white background and cartoon-like figures.  We recognize who the advertiser is, and what product is being marketed.  Beyond recognition, the communication and message is simple.  Using humor, Red Bull is showing us how the turkey became the traditional Thanksgiving meal because it could not fly away like the pig, cow, or sheep.  Of course, this is ignoring the historical accuracy on timing and geographical references.

A smart way for the energy drink beverage manufacturer to insert itself into holiday conversations.  This commercial serves multiple purposes.  For one, it brings Red Bull’s “Gives You Wings” to life in a comical manner.  The advertisement clearly shows that without Red Bull and “wings”, the turkey could not escape disaster, bringing us all the enjoyment that we have enjoyed for so many years.  On a more intrinsic level, it reminds consumers to drink Red Bull to stay alert this holiday season.

Red Bull’s “Story of Thanksgiving”. Courtesy of ispot.tv

Very simple message (drink Red Bull this Thanksgiving) that also served a dual purpose to deliver humor.  While this commercial was targeted toward the American market, it could just as well have ran during the Canadian Thanksgiving holiday in October.  However, the likelihood of Red Bull centralizing their marketing communication for both Canada and the U.S. is fairly low, thus this ad only catered to the American consumers.

Does this help reinforce the Red Bull image of being your energy drink of choice this holiday season?

Red Bull Launches New Product: BULL Energy Drink

Courtesy of BevNet.com - the new Red Bull
Courtesy of BevNet.com – the new Red Bull “Bull” Energy Drink.

Thanks to a tip-off from BevNet.com, we learned that Red Bull North America has quietly released a new limited edition orange-flavored energy drink (BevNet article here).  The new 8.4oz (250ml) energy drink is closely linked to soccer, predominantly available in sporting venues where soccer is the main attraction.  After launching beverage innovations in other areas, it appears that Red Bull has returned to exert their influence within energy drinks.  With failed experiments at penetrating soft drinks (with Red Bull Cola) and energy shots (with Red Bull Energy Shots), the renewed focus toward energy drinks is a welcome sign for the energy drink manufacturer.

However, why was this product launched without much publicity?  It took consumers to bring up this launch in order for BevNet to squeeze more information out of Red Bull.  Even a search through google has revealed no information nor any high quality images for this product as of yet.  Is this a new launch plan that Red Bull is trying out, where they offer different flavors in limited duration?  Is this even a good strategy given their strength and associations with “energy”?

Red Bull’s latest launch carries with it the discussion of “Push vs Pull Marketing”.  With consumers searching out more information on the BULL energy drink, Red Bull may have effectively created new consumer demand for this innovation – hence the manufacturer’s “pull” tactic.  Regardless of intent, they have transformed their brand loyalists into advocates for the new energy drink.  And instead of selling it into retailers and sacrificing shelf space for a new extension (the manufacturer’s “push” tactic), the consumer demand may help put this drink in the fridges and cooler vaults at the expense of Monster, Rockstar, or a host of other energy drink manufacturers.  Even if the target was for sporting venues exclusively.  If this is a new introduction strategy that Red Bull is trying, then it has been successful at generating buzz.

The question on whether this is a good strategy is a tougher one to answer.  Even with the product launch deemed a success, the question on how much more successful it would have been with marketing support remains.  Given that Red Bull and “energy drink” are synonymous like Kleenex and facial tissue, or Colgate and toothpaste, or Band-Aid and adhesive bandages, why do they not leverage on the strength of their brand name?  The equity of the Red Bull name carries with it easy access to retailer distribution and a profit premium.  The fact that the product’s packaging bears minor resemblance to Red Bull starts an entirely new discussion on what Red Bull is trying to do here.  Per the BevNet article on the different look of this product, could Red Bull be attempting to create sub-brands or sub-segments within their product portfolio?  Or are they trying to be show off more brand personality with the whimsical packaging?  Certainly thought-starters for a different day.

What we know so far is that after the foray into soda and energy shots, Red Bull has hit home runs with their energy drink product launches.  Red Bull Total Zero and Red Bull Editions should have generated incremental sales to their beverage franchise without much cannibalization.  Should the BULL energy drink become a staple, chances are it will be a success as well.