May 22, 2011


Red Bull's Billionaire Maniac: Dietrich Mateschitz is making a bold move into TV, movies, and magazines. What's the visionary behind a $5 billion-a-year soft-drink empire doing in the media business? Just what he's always done: having a blast (Duff McDonald, 5/19/11, Business Week)

It took him 10 years to get a degree in commerce from the Vienna University of Economics and Business, and he spent part of that time working as a ski instructor to pay the bills. After graduating, at 28, he spent 10 years as the international marketing director of a German consumer products company called Blendax. He was little more than a glorified toothpaste salesman, and by 38 he'd hit a wall. "All I could see was the same gray airplanes, the same gray suits, the same gray faces. All the hotel bars looked the same, and so did the women in them. I asked myself whether I wanted to spend the next decade as I'd spent the previous one."

A chance trip to Thailand in 1982 would prove to be the turning point in Mateschitz's life. Curious to know what attracted the locals to an uncarbonated "tonic" called Krating Daeng (Thai for "water buffalo"), he tried some himself and found that it instantly cured his jet lag. Not long after, while sitting in the bar at the Mandarin Oriental in Hong Kong, he read in a magazine that the top corporate taxpayer in Japan that year was a maker of such tonics. Suddenly, the idea hit him: he would sell the stuff in the West.

In 1984, Mateschitz approached one of his Blendax contacts, Chaleo Yoovidhya, a Thai businessman who was selling the tonic in Southeast Asia, and suggested that the two introduce the drink to the rest of the world, with one crucial change: It would be carbonated. Yoovidhya liked the idea, and they agreed to invest $500,000 apiece to establish a 49/49 partnership, with the remaining 2 percent going to Yoovidhya's son. (Yoovidhya remains a silent partner in the company.) Mateschitz then returned to Austria to plan the all-important packaging and slogan. For help, he turned to his university friend Johannes Kastner, who owned his own ad agency in Frankfurt.

"He said he had no money, so we agreed that he would do freelance work for me to pay me for it," says Kastner. Over the next year and a half, Kastner and his team put together about 50 different designs for Red Bull, with Mateschitz finally deciding on the distinctive blue-and-silver can emblazoned with the logo of two muscular bulls about to smash heads in front of a yellow sun. A slogan was harder to come by. "Nothing satisfied him, and I was finally so upset that I told him to find another agency," says Kastner. "He asked me to think about it for one more night. And at 3 a.m. it came to me—'Gives You Wings.' I called him right then and told him it was the last one I'd give him, but he said, 'That's it.'"

It was just what Mateschitz needed—something to convey that Red Bull had tangible effects. That, in turn, would allow his product-positioning master stroke: He would sell Red Bull as an ultra-premium drink in a category all its own. At about $2 a can, it was far-and-away the most expensive carbonated drink on the shelves. "If we'd only had a 15 percent price premium, we'd merely be a premium brand among soft drinks, and not a different category altogether," says Mateschitz. In 1987 he introduced the drink in Austria. Next came Hungary, the U.K., and Germany, and before long sales were spiking all over Europe. [...]

The success of Red Bull defies logic in one important regard: It doesn't taste very good. The amber-colored elixir's taste has been likened to "liquid Sweet Tarts" or "cough medicine in a can." (Although it does grow on you.) One early market research report in the U.K. put it bluntly: "No other new product has ever failed this convincingly." Mateschitz says he didn't care about the taste issue then, and he doesn't care about it now. "It's not just another flavored sugar water differentiated by color or taste or flavor," he says. "It's an efficiency product. I'm talking about improving endurance, concentration, reaction time, speed, vigilance, and emotional status. Taste is of no importance whatsoever."

We received an energy drink sample via the Amazon Vine review program and it made me want to shave my tongue--I wondered then if they could all taste as bad. Guess they do...

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Posted by at May 22, 2011 11:52 AM

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