How Dietrich Mateschitz Ignored The Haters And Created The Top Energy Drink On The Planet

red bull Dietrich Mateschitz

Photo: Mark Thompson / Getty Images

Red Bull is the king of the energy drink industry.It sells upwards of 4 billion cans each year and dominates its main competitors Monster and Rockstar with a 40 per cent market share. Red Bull now has a presence in more than 160 countries around the world and it employs around 8,000 people.

The man behind Red Bull’s meteoric rise is Austrian entrepreneur Dietrich Mateschitz. He came up with the idea in 1982 while sitting at a bar in Hong Kong’s Mandarin Hotel when he learned about the popular “tonic drinks” in Asia.

Here’s how he and his Thai partner, Chaleo Yoovidhya, came up with Red Bull and made it such a huge success.

This is Krating Daeng, the Thai product invented by Yoovidhya that would eventually become Red Bull

Krating Daeng is a non-carbonated energy drink popular in Thailand, based on the Japanese energy drink Lipovitan, and South Korea's Bacchus-F, which were imported into the country. Its ingredients include water, cane sugar, caffeine, taurine, inositol and B-vitamins.

And yes, Krating Daeng means 'red bull' in Thai (well, 'red gaur' to be exact).

When Mateschitz hired a market research firm to gauge interest in the product, it said Red Bull would fail

From Kerry A. Dolan at Forbes:

Before launching, Mateschitz hired a market research firm to test Red Bull's acceptance. The result was a catastrophe. 'People didn't believe the taste, the logo, the brand name,' he recalls now with a smile. 'I'd never before experienced such a disaster.'

He ignored the recommendations, and went on with his project.

He first introduced Red Bull in Austria, where it was the only product of its kind

Mateschitz cofounded Red Bull with Yoovidhya in 1984 (they each own 49 per cent of the company, with Yoovidhya's son owning the final 2 per cent), and they got TCBG Pharmaceutical to help adapt and manufacture it for the Western market.

It debuted in 1987 in Austria, entered its first international markets (nearby Hungary and Slovenia) in 1989, but didn't enter the U.S. until 1997.

Red Bull spends 30 to 40 per cent of its revenue on marketing, and it's paid off

Red Bull's marketing is what sets it apart, and is a huge reason for its success. It uses many forms of marketing, ranging from guerrilla tactics and publicity stunts to big-name sponsorships and national advertising campaigns.

Red Bull is extremely consistent in its branding, and now, it's hard to find a big-time action sports event without seeing its logo plastered everywhere.

Whether it's by sponsored air races, helicopters or extreme sports, Red Bull's brand has become synonymous with going big and going fast.

Red Bull's brand message has been received well by young consumers around the world, promising that if you drink Red Bull, you'll be seen as a self-confident, unpredictable, edgy non-conformist. You become part of the 'counterculture.'

Parent company Red Bull GmbH has a bunch of subsidiaries that have nothing to do with energy drinks, but a lot to do with its brand image

Here's a list of what Red Bull GmbH owns:

Formula-One teams: Red Bull Racing and Scuderia Toro Rosso

NASCAR team: Red Bull Racing Team

Soccer teams: New York Red Bulls, FC Red Bull Salzburg, Red Bull Brasil

Hockey team: EC Red Bull Salzburg

The drink's premium price sets it apart, in terms of perceived quality, from the big soft drink brands like Coca-Cola and Pepsi

Red Bull costs more than double per serving as Coca-Cola does, and it's not because of the cost of manufacturing.

Part of it is branding. Red Bull wants to be as different as possible from all the other soft drinks out there (though energy drink imitators are abundant, now), and the higher price point helps that.

Also, it can charge the higher price because of its claim that it can give you tangible benefits -- that energy boost.

Red Bull was initially banned in France, Denmark and Norway, but the drink was eventually legalized in all three countries

Every so often, the brand has had to deal with a PR crisis involving health issues. But the fact that it was banned gave Red Bull an even more alluring value, fitting in perfectly with the brand.

Matt Cooney at idealog recounts how the drink got big in Australia and New Zealand:

'When word spread that Red Bull had fallen foul of the authorities, demand went through the roof. In an echo of the Slovenian hard-sell, punters would buy Red Bull and immediately pull off the sticker. They'd tell their mates: this stuff is illegal. Everyone wanted to be drinking from the forbidden tin. Bar managers complained that the undersides of their tables were plastered with discarded stickers from Red Bull cans.'

Though Red Bull was once all by itself in the energy drink market, it has some growing competitors to deal with now

At 42.6 per cent market share, Red Bull's closest competitors are Monster Energy and Rockstar, which have 29 per cent and 11.4 per cent market share, respectively. The massive beverage corporations are lurking too. Coca-Cola's Full Throttle and PepsiCo's AMP round out the top five.

There's also the energy shots category, which is completely dominated by 5-Hour Energy. Red Bull tried to compete with it, but was forced out within two years.

Mateschitz has tried a few new products, all under the Red Bull brand. None of them have been nearly as successful as the original formula

Four Red Bull products have hit the shores of the U.S. Red Bull, Red Bull Sugar Free, Red Bull Cola and Red Bull Energy Shots.

Red Bull Cola and Red Bull Energy Shots both failed, and were discontinued in the U.S. They're still sold in Europe and some other markets.

The Austrian Red Bull HQ are based in Fuschl am See, outside of Salzburg -- the workplace of Red Bull's creative teams.

It also has a hangar in the Salzburg airport called Hangar 7. In typical Red Bull fashion, it features a fleet of historic aircraft and helicopters.

Mateschitz is now the richest person in Austria, and Yoovidhya is the second-richest person in Thailand

Mateschitz is happy with the way things are going, and says he'll never take Red Bull public

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