Red Bull cans Red Bull Cola
First Virgin Cola went pfffff. Now Red Bull Cola. Why is it that brand extension colas rarely seem to work? The latest to acknowledge defeat is the Austrian Dietrich Mateschitz, the founder of the Red Bull energy drink company. Thinking that the world was waiting for yet another cola band, this time a “strong & natural” one, Red Bull Cola had its debut in 2008 in the U.S., the home of PepsiCo and Coca-Cola. In mid-July 2011 U.S. media reported that Mr Mateschitz had finally pulled the plug on both Red Bull Cola and Red Bull Energy Shot.
Market observers over in the U.S. wondered why the brand had failed to excite consumers. Was it its unique flavour profile? The media controversy surrounding the company’s use of coca leaves in the beverage? Or was the cola’s premium price point its biggest impediment to success? A 12 oz. can of Red Bull Cola sold for around USD 1.50 in comparison to USD 1.00 or less for a similarly sized Coke or Pepsi product.
Pah, you literal-minded simpletons. Austrian marketing experts know better. Red Bull Cola losing its fizz had nothing to do with botched execution. The problem was much more fundamental than that.
According to the Austrian “brand strategist” Michael Brandtner, Mr Mateschitz over-valued the power of his Red Bull brand. Mr Mateschitz, said his critic, wrongly believed that consumers would chose a Red Bull if they wanted an energy drink or a Red Bull Cola if they felt like having a cola – without swapping brands. However, consumers picked a Coke if they wanted a cola.
To this day, many consumers failed to understand that Red Bull Cola was straightforward cola, albeit a natural one, and not the Red Bull energy drink mixed with cola.
Perhaps Mr Mateschitz should have consulted the Virgin Cola case study before launching his cola. Although the perma-tanned entrepreneur Richard Branson started his empire as a record label, it now encompasses virtually everything – from Virgin airlines and Virgin radio stations to Virgin financial services.
In the mid-1990s, the scale of his ambitions for the Virgin brand became clear. “I want Virgin to be as well-known around the world as Coca-Cola,” he was quoted as saying. So what better way to achieve this goal than to enter the cola market itself?
Unlike Red Bull Cola, Virgin Cola was priced 15 percent to 20 percent lower than the two leading cola brands. Still, the new cola brand struggled on both sides of the Atlantic. Not enough consumers were being won over. Part of the problem was distribution. Coca Cola and Pepsi managed to block Virgin from getting crucial shelf space.
BRAUWELT International thinks that while Mr Branson failed at distribution, Mr Mateschitz failed at pricing. These are beginners’ mistakes. Ultimately, however, the two were let down by their greatest asset: their brands. Brand extensions are a complicated thing and many brands flounder when they move into inappropriate categories. Virgin Cola and Red Bull Cola proved to be an extension too far.
