Red Bull, the energy drink giant, is to launch a natural cola variant called Red Bull Simply Cola in seven countries including the UK, Austria, Switzerland, Italy, Ireland and Russia.
Unlike Coca-Cola and Pepsi, Red Bull Cola will be 100% natural and command a premium price. Its formula will consist of kola nut and coca leaf. "If, as energy drink proponents have been saying, energy drinks are the new colas, then it's perfectly logical for Red Bull to try to reinvigorate the declining cola segment," said Gerry Khermouch, editor of Beverage Business Insights, West Nyack, New York. "It's also worth noting that quite a few of the alternative sodas have been edging into colas lately, from Grown Up Soda to, most recently, Virgil's. So it seems to be open hunting in that once-impregnable realm."The realm has fallen considerably from its golden era. Carbonated soft drink sales shrank 2.3% in 2007, per Beverage Digest. Cola, which makes up more than half of soda sales, was down 7.7%. Coke's volume was off 3% while Pepsi's was down 4.8%.This trend will present a long-term challenge to Red Bull Cola, said Beverage Digest editor John Sicher. "Red Bull is a very strong brand and it has an enthusiastic following but the cola business in the U.S. is in decline. Even with their brand strength they will face headwinds after some probable initial excitement." Red Bull already faces a highly caffeinated cola competitor in Diet Pepsi Max, which Sicher described as doing "moderately" well. Still, unlike many other beverage brands outside of the Coke and Pepsi systems, Red Bull does have the advantage of strong distribution. "That's a big difference between Red Bull and Richard Branson's ill-fated Virgin Cola, which never established a satisfactory route to market in two tries," said Khermouch. Red Bull spent $82.5 million on media in support of beverages and events last year, per Nielsen Monitor-Plus. Its agency is Kastner & Partners, Santa Monica, Calif. The budget for the launch of Red Bull Cola was not disclosed. Marketing materials read: "The cola from Red Bull. Strong & natural."Red Bull Cola will be available in 8.4-oz cans at bars, clubs and restaurants, as well as 12-oz. cans at grocery and convenience stores. Pricing was not revealed. Red Bull did not return calls. Despite its new No. 2 status in America, Red Bull is still performing strongly worldwide. It sold 3.5 billion cans globally, a 16.6% increase over 2006.
source: brandweek
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