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Says Red Bull founder Dietrich Mateschitz, "If we don't create the market, it doesn't exist."
Mateschitz's secret to creating a $1.6 billion worldwide stampede for Red Bull lies in a highly ingenious "buzz-marketing" strategy that herds consumers to exclusive and exciting events that get high media coverage. Red Bull supports close to 500 world-class extreme sports athletes that compete in spectacular and often record-breaking events across the globe. Mateschitz explains, "We don't bring the product to the consumer, we bring consumers to the product."
Today Red Bull is a powerful global brand and very few customers know the story of the highly talented, creative and determined salesman, publicity-shy Dietrich Mateschitz. Tiny Austria's only billionaire, Mateschitz located his office in the quaint lakeside village of Fuschl, near Salzburg, Austria. His architect is currently building a new office building in the shape of two volcanoes. His collection of 16 airplanes is located in a steel and glass hangar, which serves as an aviation museum and the home of the Flying Bulls at Salzburg Airport. He tries to keep it down to working three days a week. He likes to keep things simple. The size of his headquarter staff is only 200. Mateschitz farms out the production and distribution of the 1.5 billion cans sold worldwide. The total number of employees worldwide is only 1,800, which brings the sales volume per employee close to a million dollars. Mateschitz not only generates brilliant sales and marketing ideas, he is equally talented in the execution of the biggest and boldest business ideas. His latest project involves a $1 billion motor sport and aviation theme park in Styria, Austria.
Dietrich Mateschitz founded the Red Bull company.
According to company legend, the idea for Red Bull came about as Mateschitz sat at a Hong Kong hotel bar in 1982, drinking a popular local health tonic.
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Two years later, he teamed up with Thai businessman Chaleo Yoovidhya, fiddled with the traditional formula to make it less syrupy and more fizzy, and renamed the beverage Red Bull.
Packaged in silver and blue cans that picture two red bulls fighting, Mateschitz marketed the concoction to young people as an energy booster, using sassy advertising spots and the catchphrase "Red Bull gives you wings."
First launched in Mateschitz's homeland of Austria, Red Bull branched out to neighboring European countries before being introduced in the United States in 1997. Today, the company reports sales in more than 100 countries.
Red Bull spends relatively little on traditional print and TV advertising, instead relying on sponsorships of extreme sports or giving away samples at local events.
Mateschitz sits in front of a Corsair airplane, part of his "Flying Bulls" fleet. Flying Bulls is a daughter firm of Red Bull.
Mateschitz also has been involved in Formula One racing for more than a decade, using the events to draw attention to his brand. In addition, he sponsors the World Stunt Awards, an annual fund-raiser to help injured stunt workers.
The company's nontraditional marketing has paid off: More than a billion cans of Red Bull are consumed each year, according to the company. The drink's global popularity has surged quickly. It now captures about 70 percent of the worldwide energy drink market, according to Hoover's Inc., an information database of the world's top businesses.
Red Bull has paid off for Mateschitz, too. Forbes magazine welcomed the beverage mogul to its billionaires' list in 2003.
Mateschitz credits good marketing -- as well as a good product -- for his success, he told a Thailand newspaper last year.
"It is essential that one develops a unique communication and advertising strategy ... a campaign that combines body and mind in a very nonconformist way," he said in an interview with the Bangkok Post. "The image of Red Bull is definitely nothing to do with any food product, but has a luxury, lifestyle identification."
WHEN he launched Red Bull, a sweet and tangy energy drink in a slim silver can 15 years ago, Dietrich Mateschitz wrote a new chapter in marketing history. The Austrian entrepreneur not only created a new beverage category: the global market for energy drinks now doubles every year. His gut feel for branding made Red Bull a global cult drink, with euro1.4 billion ($1.3 billion) of sales last year.
"We don't bring the product to the people," says Mr Mateschitz, a bronzed and energetic 57-year-old. "We bring people to the product. We make it available and those who love our style come to us." What Red Bull showed, according to Nancy Koehn, a historian of brands at Harvard Business School, is that mass-market advertising was not the most effective way to reach and keep customers.
Instead Mr Mateschitz launched the brand by persuading students to drive around in Minis and Beetles with a Red Bull can strapped on top, or to throw Red Bull parties around weird and wonderful themes. The company's only advertisements are a series of whimsical television cartoons. Red Bull's marketing folk gloat that a recent British survey described their product as a "non-marketed brand".
It takes lots of marketing to sustain that illusion. Mr Mateschitz spent three years developing the drink's image, its packaging and its low-key, grassroots marketing strategy before testing the product on the Austrian market in 1987. He now ploughs around 35% of turnover, some euro400m last year, into marketing, sponsoring events that fit the Red Bull image, from soapbox races to Formula One motor racing. They are, in fact, the sort of events Mr Mateschitz loves himself. With his passion for flying, snowboarding and motocross, he is an unusual figure, especially in staid Austria.
His formula seems to work: last year Red Bull sold 1.6 billion cans in 62 countries, an increase of 80% over 2000. Potential growth is still huge. In the United States, where Red Bull has built up its own distribution network from scratch, starting in California in 1997 and reaching Florida at the end of last year, sales still average only one can per person. If Americans eventually drink even half as much as the Irish, who top the charts with 11 cans apiece, the company would sell over a billion cans a year in America alone.
Red Bull, a mix of taurine, detoxicants, caffeine, sugar and vitamins, is "a beautiful product", according to Mr Mateschitz. He discovered it in Bangkok when he was international marketing director for Blendax, a German toothpaste maker that is now part of Procter & Gamble. His Thai licensee, Chaleo Yoovidhya, had a tonic syrup called Krating Daeng in his portfolio. Mr Mateschitz was hooked. He always got the taxi-driver to stop on the way from the airport to buy a bottle. "One glass and the jet lag was gone," he says.
The idea of marketing the stuff in Europe came to him when he read in a magazine that Taisho Pharmaceuticals, a producer of tonic drinks (and many other health-care products), was Japan's biggest taxpayer. In 1984, he set up a company with Mr Yoovidhya and his son Chalerm. Today, they own 49% of Red Bull; Mr Mateschitz owns another 49%; and the remaining stake is in a trust. They played around with the drink's formula, translated the name into English and applied for authorisation to sell the sugary brew in Germany and Austria.
Mr Mateschitz is now based in Fuschl, a tiny lakeside village nestling in the Austrian Alps close to Salzburg and the German border. The company is building a new headquarters that will represent two interlocking volcanoes in a lake, erupting with a huge sculpture of running bulls.
Nurturing the Red Bull image is the key to remaining market leader in the energy-drinks business. Last year, Coca-Cola, PepsiCo and Anheuser-Busch, an American brewer, each launched an energy drink, attempting to get a slice of the market in which Red Bull currently has a 70-90% share. Mr Mateschitz is not worried. "The market isn't generic; it doesn't exist if we don't create it. It's a branded market," he says.
Mr Mateschitz now plans to spend two days a week coming up with wacky ideas to promote Red Bull. Already, the company sponsors an annual Flugtag, when contestants build their own flying-machines and leap off a parapet into water, true to the Red Bull slogan: "It gives you wings". His latest project is to build a huge glass hangar at Salzburg airport to house his collection of ancient aircraft, including a DC-6 that once belonged to Marshal Tito, and to host airshows.
That will change. "We have to go for diversification and acquisitions, and we are investing lots in R&D. We already have concepts and brand formulations for five years' time," says Mr Mateschitz. But if Red Bull becomes a sort of Austrian Coca-Cola, that carefully cultivated ethos will vanish like bubbles in the brew.