Red Bull is a weird and fascinating company.
- $7.4 billion in 2020 revenue
- 43% energy drink market
- Makes nothing
Nope, not even the drinks they sell. Instead, they focus 100% on marketing.
Here's what's going on 👇
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1/
Before Red Bull there was Krating Daeng (KD).
Founded by pharmaceutical entrepreneur, Chaleo Yoovidhya, KD was created to serve Thailand's country's working class.
Yoovidhya chose the gaur, a member of the bovine family from the region, as the brand's symbol.
2/
Dietrich Mateschitz was a toothpaste marketer. On a business trip to Thailand he discovered KD and fell in love with the drink.
With Yoovidhya, he decided to bring it to Europe. He made changes:
- Name became "Red Bull"
- Added bubbles
- Used a thin can
- Targeted elites
3/
The deal Mateschitz and Yoovidhya struck outsourced production of the drink to the Thai entrepreneur's pharmaceutical company.
That fundamental structure has remained in place today: Red Bull outsources production and focuses on distribution (marketing).
4/
Mateschitz noticed the rise of extreme sports starting in the 1990s. He thought Red Bull should be a part of it.
The years since have seen the company amass an insane empire across sports, media, and apparel.
5/
There is some truly weird stuff included in Red Bull's product range:
- An apparel line called "AlphaTauri"
- A travel agency called "Destination Red Bull"
- A career guidance website called "Wingfinder"
6/
True to form, Red Bull doesn't make any tangible products.
Who they outsource to:
Drinks ⟹ Rausch
Clothing ⟹ Schoeller
Travel ⟹ The Travel Birds
Stock Music ⟹ Rebeat
7/
Why does Red Bull do all of this stuff?
Red Bull can't differentiate on product. So it pours money into unique advertising. Look at the percentage of revenue RB spends on marketing compared to other beverage brands:
- $KO: 8.4%
- $PEP: 4.4%
- RB: 33% (!!)
8/
Red Bull also handles marketing differently than other companies. It has two priorities:
1. Buying distribution.
2. Manufacturing history
What does that mean?
9/
Rather than pouring cash into paid ads or sponsorship, RB invests in owning new distribution channels.
Coke might sponsor the Olympics, but RB will buy teams, tv channels, and host events.
10/
In time, these costs became a revenue opportunity.
Suddenly brands want to advertise on Red Bull's platforms, whether that's The Red Bulletin magazine, Servus TV, or a new motocross race.
11/
Red Bull might not make its own drinks, but it does manufacture something: history.
What does that mean?
RB aggressively invests in soccer, F1, esports, and hockey teams.
Why?
12/
Sporting teams reliably create history.
Season after season, they compete for titles and cup competitions.
Winning ensures RB's name is quite literally written into the sport's history.
This is profound: RB doesn't *sponsor* the story, it becomes part of it.
13/
This gives RB's product differentiation that it can't supply through the production process.
It also continuously reduces CAC. Why?
- Creates deep rapport with fans
- Allegiances are passed down thru generations
- Earns huge organic exposure
14/
Though it was started +30 years ago, RB feels like a particularly modern brand.
More and more products are being created. Many are fundamentally similar. That means true differentiation will come from brand and storytelling.
Red Bull does it better than almost anyone.
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