Red Bull's Good Buzz

It's 1 a.m. on a weeknight and the party is in full swing at Float, a popular New York nightclub. The music is pounding, the people are dancing and the bar is covered with little blue and silver cans. Red Bull is in the house. "It really gets you up," says 29-year-old Jodi Bleier, sipping a Red Bull and vodka. A Red Bull sign glows pink behind the bartender. "I was working all day and I needed something to get me going." Heading for the dance floor, she adds, "It totally works."

Indeed it does. Since it was introduced in the United States four years ago, the kicky concoction in the flashy 8.3-ounce can has developed both mystique and muscle. Initially the drink of choice among extreme athletes and all-night ravers, Red Bull has worked its way into the local supermarket. In the process, it has spawned a hot new beverage category that's got Coca-Cola and the other big companies rushing to catch up. With Red Bull leading the way (it controls about 70 percent of the market), domestic sales of energy drinks in the United States topped $140 million last year and could approach $500 million in the next few years.

That's just a drop in the $80 billion beverage-industry bucket, but the major players have learned that they ignore such fledgling trends at their own peril. Mighty Gatorade started as a niche drink in 1967. Now, to acquire the brand and become a sports-drink superpower, Pepsi has agreed to pay nearly $14 billion for Quaker Oats, which owns Gatorade. Determined not to miss out on the next breakout hit, Pepsi, Coke and Anheuser-Busch have each rolled out energy drinks in recent months. Busch went national in March with 180 (it's supposed to turn your energy around 180 degrees), and Coca-Cola has introduced KMX (the letters, which don't mean anything, have an energetic sound, Coke says) in several key markets. Pepsi, meanwhile, bought the South Beach Beverage Co. in January for $370 million and now counts the bluntly named Adrenaline Rush among its brands.

Red Bull executives say bring it on. They're confident they can hold their own against the beverage behemoths by sticking with their viral approach to marketing. Introduced in Europe in 1987, Red Bull is the creation of Austrian businessman Dietrich Mateschitz, who based the drink on Krating Daeng, a popular health tonic he encountered in Thailand. Since its U.S. launch in 1997 in the San Francisco Bay Area, Red Bull has grown slowly but steadily, city by city, region by region, and is now available in 40 states. The core tactic: company reps target key neighborhoods, nightspots and gyms in each new market, relying on local scenemakers to spread the word.

For the personal touch, Red Bull employs dozens of "consumer educators" like Marissa Marquez, who zipped around Montebello, Calif., one day last month handing out free cans of Red Bull. "Can I offer you some energy today?" Marquez cheerfully asked firefighters, construction workers and golfers. Last fall, on a Los Angeles beach, personal trainer Michael Simmons got a free can of Red Bull. He's been drinking it regularly since and he recommends it to his clients. "It's like yippee-ay-oh-kiyay," says Simmons, 37. "It's a lot of wallop in a can." The lightly carbonated drink has a sweet, lemony taste, like a melted lollipop. Each can, which costs about $2 in a convenience store, contains 80mgs of caffeine (more than twice as much as a similar serving of Mountain Dew and about the same as a strong cup of coffee), along with B vitamins and taurine, an amino acid.

Red Bull's prime consumers are young adults, better known as kids in their 20s. (Energy drinks are not recommended for children.) The company works hard courting the college crowd and has also established itself in the black-and-blue world of extreme sports. Red Bull underwrites a variety of competitions and backs about three dozen extreme athletes, including kayaker Tao Berman, who set a world record by paddling over a 98-foot waterfall.

Now Red Bull now has to survive in extreme business. Busch is targeting the high-end clubs where Red Bull first took hold, while Coke and Pepsi are flexing their massive distribution muscles in convenience stores and supermarkets. Competing head to head on all fronts with the big players is a true test of guts and endurance for Red Bull. It's bound to involve long days, late nights and plenty of you-know-what.

Red Bull's Good Buzz | News