RED BULL vs. MONSTER
Brand Audit on the two famous energy drinks
The overall market
The energy drink sector appears to be very lucrative. The market benefits from a rising popularity which conducted to boost its value. Indeed, prices are still at a premium in spite of increasing sales and a higher competition. The attractiveness of the sector seems high as consumers are ready to pay a relatively high price per liter for single-serve units of the revitalizing drink.
Besides, the growing number of rich people who don’t have enough time has resulted in functionality becoming a key factor. Nonetheless, it doesn’t mean that the players on the markets don’t try to constantly renew themselves. Thus each leader is attempting new flavors, sugar free variants and bottle changes. Red Bull, Monster, Burn and GSK (Lucozade) account for a large percentage of sales in the energy market and these two have created barriers to entry which limits the expansion of the other firms in competition. Another interesting point is that energy drinks are not only competing with ones another but also with non-alcoholic beverages companies, since not all the consumers drink those beverages to get pushed when doing sport. Many external factors have influenced the demand for this market, especially those related to the increasing popularity of fitness lifestyles and gym membership. Stimulant drinks are currently mainly aimed at the 18 – 25 year old market.
In order to understand better the impact of the overall market on the brands management, we studied the energy drink market through a Pestel analysis.
PESTEL analysis
By Gladys
What is the position of energy drinks brands on the French market?
Energy drinks are present on many shelves in the supermarkets even though the French National Food Security Agency (Agence nationale de la sécurité alimentaire, Anses) highlighted in October 2013 the risks that their consumption entails. Forbidden in France until 2008, the sales of these products containing ingredients such as taurine, caffeine and ginseng, have been soaring for 5 years. They reached a volume of 36.5 million liters in 2013, according to Nielsen, which represents a 13, 4% annual increase compared to 2012. Regarding its value, this market is currently estimated at € 143.3 million in value and was to 6, 2%. In 2009, it only represented € 95 million in value for a volume of 20. 6 million liters, according to the IRI institute.
In spite of this relatively strong growth, energy drinks are far less consumed than the other drinks without alcohol that remain big competitors. Brands that contain coke are still dominant on the drink market (53,9% of market share in volume), followed by soft drinks with fruit flavors (13,9%), fruit drinks or fruit flavored still drinks (12,7%), ice teas (8,7%) or lemonades (7,1%).
Nevertheless, the energy drinks market is growing fast. Indeed, the Austrian brand Red Bull owns 0,6% of the beverages market and is the leader of the energy drinks market in France, according to Rayon Boissons. Red Bull already eclipsed some of its old competitors like Nestea (0,2%), Pulco (0,2%) et Sprite (0,50%) and is getting dangerously closer to Capri-Sun (0,6%) or Seven Up (0,8%). These results show that Red Bull’s very aggressive marketing approach is totally worth it. They use great media stunt to improve awareness and word of mouth to raise awareness and improve their brand image (for instance, the jump into the empty space of Felix Baumgartner from 39 kilometers height, in 2013).
Private labels try to launch counter-attacks.
Based on the Nielsen data provided to LSA (French magazine) , Red Bull was the most drunk energy drink in France, owning 49,6% of the market in volume, followed by Monster (18,3%) and Burn (6,3%), two brands distributed by Coca-Cola. However, they are being more and more threatened by private labels such as Leclerc, Carrefour Discount and Casino that attempt to differentiate themselves with very low prices in order to gain market share. Altogether, those distributors brands (private labels) generated 16,9% of the volumes sold in large-scale distribution stores in 2012.
Energy drinks market: a sector highly monitored by the French government.
The Minister of Health, Marisol Touraine, had suggested a tax on these beverages but her proposition had been rejected by the Constitutional Council in December 2012 because “no objective and rational criteria” justified it.
-
Constrain in terms of the nature of the product and the purchase
Two risks could be perceived as quite high to the customer: the performance risk and the psychological risk.
The performance risk perceived by the consumers prior to purchase means that the energy drink doesn’t perform as well as expected, in other words that the drink would not have the effect it should have: revitalizing their body and their mind (benefit promised). To reduce this risk perception, Red Bull and Monster can prove that their products are performant by using customized information and word-of-mouth communication that will influence them more than other types of communication, since these factor stem from consumer experience and are relevant to product purchase.
The psychological risk could also be perceived as high because drinking the energy drink could lead the consumer to regret it, especially if they are aware of the health issues it could involve. Then this reaction could conduct the consumer to feel a psychological discomfort.
As for the Financial risk perception, this one would be quite low as there wouldn’t be any real financial loss if the consumer is not satisfied with the product, since it’s not expensive (3 € maximum a can of half a liter). Indeed, the financial risk will be perceived as low by the customer because the loss of money is not an important consideration during the pre-purchase phase.
Basically, the global risk perception is low which explains the relatively low-involvement buying decision.
The purchasing frequency obviously depends on the consumer. If they like energy drinks to get pushed for work, or sport, or just for parties, then the purchasing frequency of the products will vary according to the frequency of these activities. Regarding the size of budget, this one has to be reasonably high since the energy drinks prices are premium (except the private label prices but their products are less easy to find).
-
The different touch points
Packaging:
Most of the existing energy drinks are contained into aluminum cans and a few in plastic bottles. The packaging of the two brands we are auditing are specified in the sections of the blog dedicated to each brand.
Channel:
Most energy drinks use distribution channels as a marketing tool. Indeed, the most sold ones in France (Red Bull, Monster and Burn) are available on the shelves in any hyper or supermarkets but also in fashionable night clubs, convenience stores and gas stations all across the country. Those selling points are strategic for energy drinks brands in France because the target group goes to those places regularly since the targeted consumers are business men, dynamic and young people, truck drivers, teenagers or older people ,who like mixing an energy drink with alcohol.
Universe:
Each brand has its own identity but if we had to sum up, we would say that they all want (more or less) to address to people who need to move, to escape their daily life and who like to live “on the go”. The energy drinks brands inspire freedom, dynamisms and a bit of craziness.
What can be done with the product to improve performance?
We observed different opportunities the brands could seize to improve their sales on the market such as product diversification, changes in flavor, creation of less caffeine versions to answer health concerns, special editions, etc.
References:
http://www2.warwick.ac.uk/alumni/services/eportfolios/bsqjfb/redbull.pdf
http://fr.slideshare.net/SwapnilTanna/energy-drinks-12035563
By Gladys
As time goes by, it seems that the energy drink market keeps getting bigger and bigger. A market which is actually very young, if it’s worth mentioning, since the first energy drink engineered with the purpose of providing energy to whom drinks it was launched only in 1960 in Japan. And it’s not even in 1960 but more than 25 year later that this market started to expand within the creation of Redbull in England; 37 years later that it was introduced in the US; and 42 years that Hansen Natural was created.
Over the years, their place in our everyday lives started to grow exponentially. The only fact of looking at the size of their shelves nowadays suffice to notice that. And yet, the legal issues that faced brands such as Redbull or Monster around the composition of their products were very hard to face and happened to be a real slowdown in the energy drink expansion process.
According to some studies and researches lead by Mintel, if health hazard stays in the mind of energy drink consumers (59% of them), it doesn’t constitute a real restrain to their consumption
It’s in 2005/2006 that the market sales exploded and since 2008, the energy drink market has observed a continuous growth of sales and even an acceleration of this growth for the past two years.
“Energy drinks remain the most dynamic segment in the soft drinks market, with strong growth in most countries. This is testament to its combination of both fun and functionality” (Esther Renfrew, Zenith Market Intelligence Director).
We may need to mention the fact that energy drinks have a wide range of competitors on the soft drinks market. At some point, before the expansion of energy drinks, some soft drinks were considered as providers of energy for consumers. Cokes, multivitamin juices among others and since few years, vitamin waters, or sport drinks can be seen as substitutes. On the same category, another type of product has begun to show interesting results: Energy shots. If the competition is not exactly the same as in the energy drink market, we observe the presence of the major brands though.
These impressive numbers reveals the consistence of a very young an innovative market dominated by Monster and especially Redbull. If at first these products were engineered for energy and concentration thanks to ingredients such as taurine, ginseng or caffeine, the target of energy drink brands as gone broader with time. If you were to drink Redbull in 2002, it could be because you needed energy and focus for a long day or night of work. Today, it can also be for partying since it is used as a soft to mix with alcohol (especially vodka), sports … And it occurs that innovative brands always find new ways or reasons to drink their products.
One can observe though that if Redbull & Monster seem to dominate the market wherever we look, the rest of the pie shared by the other brands can be different according to the studied country. As for example, Rockstar, which is the 3rd energy drink brand in the US is not present on the French market. In the French market, the brand burn is the 3rd most important energy drink.
And even if the US market shows a bigger potential than the French one, the success of energy drinks in France is not a very big secret. We can thus wonder why Rockstar that shows so much success in the US or in Germany is not present in the French market. Every country has its own characteristics and that’s not because a brand observes a successful activity in one market that she’s able to do the same in every market, especially in different continent.
French market:
2009: 95 € million for 20,6 million liters
2013: 36,5 million liters of energy drink sold.
+ 13,4% compared to 2012
Market value: 143,3 € million
+ 6,2% compared to 2012
Energy drinks sales show a high increase in Hypermarket, Supermarket and also in Hard Discount in 2013. This is the reward for energy drink brands to quite an aggressive marketing strategy in the French market which appears to be successful. If Redbull, Monster and Burn are the three most consumed brands in France, it is important to notice also the presence of private labels proposing less expensive products which is a very important factor to young males around 20 which constitute the core target of such brands.
At a global scale, excepted for Monster & Redbull, the competition is hence very “stiff between an increasing number of smaller companies” (sources: http://energydrinks.factexpert.com/882-energy-drink-industry.php).
The impressive rise of this sector worldwide deserves an interest really when looking at all constraints these brands have to deal with as the time goes by. As if the health concerns weren’t enough, a taxation law on energy drinks was being studied recently in France but then again, Redbull managed to bypass it without any negative economic fallout: at the beginning of 2014, the sector observed a sales’ increase of 8,4 %.
The main observable reason for the performance of this market is the increasing brand awareness among consumers. Everyone knows about Redbull: the funny commercials (“Redbull gives you wings), the beautiful extreme sports videos (often in partnership with GoPro nowadays), Felix Baumgartner’s space jump… It seems that, especially for Redbull, energy brands are more and more taking the offensive. The space jump was a huge piece of advertising that the whole world could see. If it is a very special piece of advertising in the sense that it has (almost) nothing to do with Redbull’s products, it yet permitted to the brand to take a place in people’s mind.
By Guillaume.
Sources:
http://www.caffeineinformer.com/the-15-top-energy-drink-brands
http://energydrinks.factexpert.com/882-energy-drink-industry.php
http://www.preceden.com/timelines/66113-the-history-of-energy-drinks
http://www.beverageworld.com/articles/full/16850/energy-drink-reboot
http://www.zenithinternational.com/articles/1012
http://www.planetoscope.com/boisson/1527-consommation-de-boissons-energisantes-en-france.html
http://www.researchbeam.com/global-energy-drink-2014-2018-market
http://www.notre-planete.info/actualites/3813-Red-Bull-danger-sante
http://fr.slideshare.net/CreativeDunning/red-bull-marketing-campaign
