Red bull how do they make money

Developed markets remain very attractive profit pools given the levels of widespread discretionary income for products like Red Bull, and emerging markets, as they build manufacturing capacity, will be attractive places from a cost perspective. Though initially seeming disjointed that owning extreme sports events is the core operating model of Red Bull, I now understand how their operating model is key to maintaining the customer value promise of an edgy drink to the consumer.

This trend has weighed enormously on the soda manufactures in the last several years, and I think the general trend toward higher-end and healthier categories e. Furthermore, bu pushing really hard on the marketing of a specific theme action sports RedBull has build an enormous amount of fragility into their positioning. RedBull has exclusivity agreements with most bars and events that serve the drink, and their incentive compensation structure encourages their distribution organizations all the way down to the staff that delivers the drink to form strong bonds with these venues and keep other beverage companies locked out.

First of all, I did not know Red Bull was a Thai jetlag antidote and the translation for the Thai words for that, so thank you for educating me. Second of all, I think it is quite clever that the company has managed to build this massive business and brand around something they do not manufacture without anyone being any the wiser.

I think you have effectively laid out how the Red Bull brand and extreme sports image are intricately linked and how, in fact, the actual business model of the Red Bull company licensing the drink is driven by the Red Bull brand perception driven by the sponsorships, etc.

What I wonder at this point is whether Red Bull has any plans to expand into other drinks within this niche extreme sports category or even leverage their business model in other markets. A question related to that would be whether the licensing agreement with the Thai manufacturer would allow them to do so.

Great post! You must be logged in to post a comment. Skip to content. The HBS Digital Initiative brings together perspectives across disciplines to help people understand how technology is transforming organizations and the greater world. It turns out it is one of the genius ways that have helped them grow into a behemoth that they are today.

Promotions and marketing activities forms part of the strategies that help Red Bull energy drink to make a lot of money in the market. Red Bull was founded in by a sports enthusiast Dietrich Mateschitz who reportedly drinks up to 10 cans of it a day.

I think this is one thing he shares with Warren Buffet who is a great fan of the Coca Cola…haha! For any business, making money is the absolute goal. It is what entrepreneurs and business leaders want as they serve their customer.

It is a product that serves their customers well. They also make money by promoting and marketing the Red Bull energy drink massively which drives sales.

If you think about it, a company that sells about 7. That is how customers respond to their products. For example, the energy drink maker sold 7. It is also important to remember that the energy drinks giant owns several soccer teams, two formula one teams and a roster of athletes that are into thousands.

That is how they manage to have such a huge financial war chest to invest in marketing and sponsorship. This is a very positive step in the right direction. Not only has Mateschitz not publicly bemoaned this huge loss to his team but its boss Christian Horner has thrown his support behind it. Time will tell who makes the next move. This is a BETA experience. You may opt-out by clicking here.

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