Bull Market

How does a caffeine-loaded energy drink become a billion-dollar brand? RED BULL's creators inject their product with the adrenaline-by-association of extreme sports, and they never stop in the quest for buzz.

Jan 4, 2002
Outside Magazine

THE DAY WAS SO PERFECT, it looked like a commercial. The skies were blue, the sand was white, and the temperature was in the low seventies. Among a handful of people milling around on a broad stretch of Miami Beach shorefront, three guys were fussing with kiteboards—contraptions that consist of large, crescent-shaped parachutes rigged atop miniature surfboards. Two people wielded video cameras, and several more clutched little silver cans of the peppy refreshment that was paying for all this activity: Red Bull, the European "energy drink" that has become a phenomenon in the United States, largely on the strength of incredibly shrewd marketing.

Introduced here in 1997, Red Bull has spawned an entirely new category in the U.S. beverage business. Energy drinks accounted for $275 million in wholesale revenues last year, a whopping 65 percent of which went to Red Bull. Owners of the privately held Austrian company won't talk about its financials—or about much of anything else—but annual sales reportedly top $1 billion worldwide.

Red Bull is famously popular with college kids and nightclubbers, whom the company aggressively targets, but its most public tactic has been to wrap the drink in the sweaty mantle of extreme sports. To that end, Red Bull sponsors its own stunts and competitions in relatively obscure disciplines like street luge, waterfall kayaking, and freeskiing. The Red Bull Snowthrill of Alaska, for instance—held March 21-28 this year in Haines—gathers 12 freeskiers in the Chugach Mountains, pairing each with a photographer and offering cash prizes for the hairiest images.

In Miami late last December, the Red Bull forces were preparing something equally audacious: a small flotilla riding wind-powered kiteboards 88 miles from Key West to Varadero, Cuba, a distance that would set a new world record for the emerging sport. Kiteboarding blends elements of windsurfing and wakeboarding, and lately has gained critical mass as the equipment becomes more affordable. The rider stands on a four- to six-foot board, secured by footstraps or boots; he's propelled by a billowing kite, which is controlled by manipulating a handbar that guides 100-foot-long tethers. When the wind is right, people who know what they're doing can pull off astonishing 40-foot-high jumps and butter-smooth landings. People who don't can break their butts.

As I joined the beach crew, Kent Marinkovic, one of the kiteboarders, was talking to the cameras. Marinkovic is national sales manager for Adventure Sports, a Miami extreme-sports equipment retailer. He's 33, preppie-looking, very tan, and (to hear him tell it) very, very motivated. "I'm super-motivated," he said. "I don't get nervous."

Nearby was another kiteboarder, Neil Hutchinson, who co-owns a Fort Lauderdale-based watersports outfit called Kitesurf U.S.A., scorns vegetables of any kind, and smokes Marlboro Reds. He's British, 31, and looks like a leather-hided Peter O'Toole. When he took his turn explaining his equipment and tactics to the lens, he was immediately heckled by Oliver "Mowgli" Butsch, the third kiteboarder.

"Neil has tactics!" Butsch bellowed in mock disgust. "Buddy, I'm going over. I'm arriving. Fuck tactics!"

Butsch is Austrian, so it was hard not to think of Arnold Schwarzenegger when he spoke, which was often. He's a 38-year-old model with long hair, shades, and a tan even more stupendous than Hutchinson's. He charmed us all by ignoring his constantly trilling cell phone and explaining why: "The more you pick it up, the less people will call you. If you never answer—they want you!"

I took a seat under a beach umbrella and opened my first-ever can of Red Bull. You don't drink this stuff for the flavor—it's been described, accurately, as tasting like liquid Sweetarts—but for the effect. It's supposed to give you a boost. As the can puts it, Red Bull "Vitalizes body and mind."

Marinkovic joined me, and I asked about Red Bull's appeal. He stared at the can in his hand, thought about it, then said: "It makes a good mixer with vodka. And it's kind of a hangover cure."

MAYBE IT WAS THE RED BULL, but the beach scene struck me as odd. It wasn't the apparent incongruity of a "fitness" drink that's used as a party potion. Nor was it the maddening uncooperativeness of Red Bull's PR flacks, which I'd experienced from the moment I first contacted the company. (I'd originally been invited to ride in one of the boats escorting the kiteboarders to Cuba. Then I was disinvited. Then the trip was postponed and I was invited again. But it was postponed again; from there I entered an information-free loop of shifting dates and contingencies. We finally hit on a compromise: I'd go only as far as Key West.)

No, what seemed unaccountably weird was that this was a marketing event no one knew about. There was no advance press release. There was no Red Bull tent set up to attract local news crews. This was one of the most outrageous publicity stunts I'd ever heard of—kiteboarding to a nation that's under a strict U.S. trade embargo—and it seemed to be happening in a vacuum. How could this possibly make sense?
Well, I have a theory, and to explain it I should probably clutter the language with an invented word that summarizes my thinking. So here it is: murketing.

Murketing, as you might guess, derives from murky. Usually the wizards of branding want to be extremely clear about what their product is for and who's supposed to buy it. Red Bull does just the opposite. Everything about the company and its sole product is intentionally vague, even evasive. While the drink appears to be targeted specifically at someone—extreme athletes, ravers, cosmopolitan students—the brand identity is actually pretty nebulous. You could argue that what Red Bull drinkers have in common is a taste for the edgy and faintly dangerous. But what does this really mean?

I was certainly murkified the first time I came across Red Bull. It was in a bar in the French Quarter of New Orleans, the city I live in. The cans are small (8.3 ounces), usually cost $2 or more, and feature a silver-and-blue pattern and two red bulls about to head-butt each other. "With Taurine," it says on the front. The drink also contains 80 milligrams of caffeine. Red Bull turned out to be fairly easy to buy in the Quarter, which didn't make much sense, given that the Quarter is arguably the most unathletic neighborhood in the world. So I had questions. How did an energy drink find its way into the company of such good-time classics as the Hurricane and the Hand Grenade? What's "taurine"? Why is the can so puny, while costing three or four times more than a 12-ounce Mountain Dew? And what's with those rumors about what else is in Red Bull?

I'll get to all that. But first, some Red Bull background.

The company is headquartered in Fuschl, Austria, a lakeside village outside of Salzburg. The official corporate creation saga says it was invented by a Fuschl resident and entrepreneur named Dietrich Mateschitz. Traveling in Asia in the 1980s, Mateschitz supposedly came across a syrupy tonic favored by ricksha drivers, and discovered that its key ingredient was an amino acid called taurine, which occurs naturally in human and animal bile. He adapted it to a palatable drink and launched Red Bull in his home country in 1987.

Not much else is known about Mateschitz. Red Bull gets its share of bad publicity because there have been deaths allegedly associated with its use as an alcohol mixer at raves and other party settings. Mateschitz avoids such nagging issues by almost never being interviewed, and my requests to speak with him were turned down flat.

"He doesn't like the media," offered Emmy Cortes, Red Bull's U.S. spokeswoman. But she assured me he is "a very charismatic gentleman" in his "midfifties," single, and "kind of a playboy." Here she added an impish laugh, which seemed a little practiced. "Not even that many people in the company have met—or even seen a picture of—Dietrich. He's almost like a myth within the company." Again with the laugh. This coyness, she explained, was of a piece with "the mystique of the brand."

"Mystique" comes up a lot when Red Bull is discussed by marketing experts, who seem to adore it. "We live in an emotional society," purrs Marc Gobé, president and CEO of the New York- based branding firm Desgrippes Gobé Group and author of a marketing tome called Emotional Branding. "Extreme sports deliver on that need to, to... vibrate, in a way. Red Bull is one of the first products I've seen that delivers on that energy."

But the word most commonly used about Red Bull is "stealth." When the company came to the United States five years ago, it did not roll out a big, flashy ad campaign or buy massive, coast-to-coast distribution. Instead Red Bull's operatives slunk from city to city, using "street teams" to murmur the good word to all-important, trendsetting Gen Y types. According to Nancy Koehn, a Harvard Business School professor and author of the book Brand New, these "cosmopolitan" young people view Red Bull as a product of the "global village."

There's truth in all this, but I had to wonder: Are the experts describing the mystique of Red Bull, or are they helping create it? Because Red Bull's street vibe didn't just happen. According to Brandweek, in 2000 the company spent $100 million marketing its "stealth" brand in the United States alone—bankrolling events, installing displays in nightclubs, and so on. Red Bull stokes demand through a network of what it calls "mobile energy teams," which hand out free samples. In New Orleans, the local team tools around in a super-modified Suzuki Vitara, all done up with the company logo and a big silver can mounted on the back. Cortes said these teams show up at places where people might "need a boost," like gyms, office buildings, and construction sites.

"It's rare for them to hit a bar," she assured me. She also claimed that less than 10 percent of the company's sales come from bars and nightclubs—though she admits that the first place in New Orleans to sell Red Bull, a year and a half ago, was a bar on Bourbon Street.

In a random survey, I spoke to a few Tulane University students about Red Bull, and (surprise!) they thought of it only as a bar drink. One typical consumer was Kaytie Pickett, a dormitory resident assistant who heard about Red Bull from sorority girls. The essence of their message: "It's legal speed."

"It's really a kind of fashionable drink," she said. "You see the fashionable sorority girls buying their can of Red Bull with their Marlboro Lights. It's like: 'Look, I can afford to pay $3 for this ridiculous drink.'"

Which leads to the first iron rule of murketing: Stay silent about what it is that makes you different. Someone else will eventually supply the answers.

THE ORGANIZER OF the "Cuba crossing" was Gilles d'Andrieux, a dashing 32-year-old Frenchman who looked very much at ease in neatly pressed pants, a powder-blue dress shirt, and suede shoes as he strolled across the sands of Miami Beach to greet his team. He'd brought chicken and tuna sandwiches for everyone. Neil Hutchinson diligently picked all the olives and avocado off his as Gilles explained his plan for arriving in Key West before sunset. As it turned out, the sun was almost down before Gilles had finished rounding up his 22-person crew and getting us on the road.

The crew's fabulousness quotient was high. There was Gabriela Marques, 25, a Brazilian nutritionist who looked like a model. There was Fabrice Collard, a 28-year-old Frenchman who would serve as the expedition meteorologist—and who also would be one of the kiteboarders. There was Delio Gonzalez, one of the boat captains, who seemed to speak about four languages.
Gilles is based in Miami, where he operates as a freelance extreme athlete and event organizer. Over a period of two months he had lined up the support boats and crews, monitored the weather, dealt with U.S. Customs (there was endless red tape, which ended with the team promising not to spend any money in Cuba), made arrangements with a Cuban marina, and generally kept all the moving parts in sync. After the traffic-delayed, five-hour drive to Key West, I caught a ride with him and some film-crew guys to a bar called Finnegan's Wake, where everyone was supposed to gather for dinner around 9:30. But we were late, we hadn't found the bar, and Gilles, who was behind the wheel, was starting to seem like that rarest of things: a tense Frenchman.

"Excuse me," he asked passersby on the street. "Do you live in Key West? Where is Grinnell Street?"

As we searched, he squinted through the windshield at flags and other wind indicators. The latest round of weather data had suggested that the wind might not be strong enough for a launch the next day. But now Gilles was guessing it would gust at 15 knots in the morning—good enough. "If that flag is blowing straight out, we should go," he said.

When we finally made it to Finnegan's Wake, everyone was there, including the crew, Red Bull marketing reps, and 35-year-old Paul Menta, the fifth and final kiteboarder and owner of a company that offers kitesurfing lessons in Florida, Maui, and Venezuela. Menta had kite-surfed in 93 locations around the world in the past year, most recently in Venezuela, where he'd suffered severe stomach flu. Three months earlier he'd been bitten by a shark. We shook hands. I asked him how he felt.

"Ah, I'm fine," he said, looking tired. "I'll be fine tomorrow." Extreme! But he didn't sound convinced.

Ultimately, Red Bull officials decided to postpone the launch for one more day. The next morning, the little breakfast room of the Key West Comfort Inn was made over into Command Central, with a laminated map taped to the wall. Gilles arrived and led everyone through the basics. The 88-mile trip was expected to last eight hours, touching down on the coast 100 miles east of Havana. Winds on launch morning would likely gust to 20 knots or better. He went over elaborate safety procedures concerning support boats, flares, life vests, two-way radios, and the like. Just in case these didn't help, Red Bull covered its bases on the liability front, giving everyone forms to sign that contained blame-shifters like: "I agree that upon my transport to any medical facility or hospital, Red BullÉshall not have any further responsibility for me."

Jen Klaassen, a Red Bull rep, added that if the athletes wanted to drink a can of Red Bull now and then as they crossed, that was just fine, but they should balance it with equal amounts of water to avoid dehydration, since Red Bull's caffeine is a diuretic. "Red Bull, water, Red Bull, water," she said.

To which Neil, the heavy-smoking Brit, added: "And on the way back, it's Red Bull, vodker, Red Bull, vodker." A lot of people laughed, but the Red Bull contingent only smiled.

RED BULL'S DOMINANCE seems more remarkable when you consider that it immediately attracted a swarm of shameless knockoffs backed by beverage giants. Anheuser-Busch has a drink called 180, Coca-Cola has one called KMX, and Pepsi now has two: SoBe's Adrenaline Rush and a Mountain Dew spinoff called Amp. All come in skinny silver cans. Adrenaline Rush is Red Bull's nearest competitor, lagging far behind with just 12 percent of the American market. Some big firms are also dabbling in a new category called "nutraceuticals," a miscellany that includes teas, juices, and carbonated drinks that make holistic-sounding health-swig claims. Pepsi's SoBe has several products in this category, and last year Coke bought a nutraceutical-maker called Mad River Traders.

Red Bull's rise has also come against a backdrop of strange rumors and sinister speculation. Pretty much from the beginning, health officials in other countries have had questions about it. In Norway, Denmark, and France, Red Bull's sale is currently limited to pharmacies, and it has not gained approval for sale in Canada.
The controversy stems from a handful of deaths in which an overload of Red Bull (sometimes in concert with alcohol) allegedly played a role. In March 2001, a Swedish woman collapsed and died on a dance floor after reportedly slamming down a couple of cans that were spiked with alcohol. Hers is one of three cases under investigation in Sweden that feature accidental deaths possibly linked to Red Bull—two involving alcohol, one not. What's the problem? One theory is that Red Bull with liquor acts like a poor man's speedball—a dangerous mix of upper and downer.

"What most concerns me is the alcohol," says Gregory Stewart, co-medical director of the Institute of Sports Medicine at Tulane. "If you're mixing it with vodka, it keeps you awake and alert"—counteracting the depressive effects of the liquor—"and you run the risk of alcohol poisoning."

Red Bull's Emmy Cortes has heard all this before, and has a ready, multipronged response: The company doesn't market Red Bull as an alcohol mixer; "individuals should exercise common sense"; and no one has ever proven the drink to be harmful. In the United States, an FDA spokeswoman says the agency is aware of Red Bull, but there's currently no lurking prospect of federal regulation—most of the reported problems have more to do with using the product unwisely, she says, than with Red Bull itself.

The rumors are more amusing. They tend to focus on the drink's caffeine and other ingredients, especially taurine—it's bull testosterone, it's bull semen, it's bull urine, it's an aphrodisiac, etc.

Cortes laughs off the more outlandish of these, and says the caffeine level is about 80 milligrams per can, equal to that in one "weak" cup of joe. Fine. Then what is special about the drink, and about taurine in particular? Taurine is important, she says, because "in times of stress and strain, your taurine levels are depleted, and Red Bull replaces them." Dr. Stewart laughs right back at that, dismissing the idea that boosting taurine levels has a meaningful impact on physical or mental performance. Cortes herself concedes that "taurine alone isn't gonna give you the same kick as Red Bull." The key to the "kick," she says, comes from the combination of caffeine, taurine, and glucuronolactone, a "carbohydrate that rids your body of toxic substances."

Uh-huh. Here's another possibility: The secret is, there is no secret.

An interesting precedent for this confusion involves good ol' Coca-Cola. When it started life more than 100 years ago, it was, in fact, a patent medicine. It famously had a "secret formula," and early on its promoters made vague claims about the "invigorating" power of its mysterious ingredients, touting "the wonderful Coca plant and the famous Cola nut." (The cocaine element of the secret formula, always minuscule, was reduced to nothing by 1903.) Red Bull might seem like the anti-Coke today, but the echo of those early, pioneering salesmanship efforts is loud and clear, and leads to the second law of murketing: Confusion is good. Dopey rumors and allegations of danger actually help sales.

OF THE FIVE YOUNG MEN who eventually left Key West via kiteboard, three made it all the way to Cuba: Neil, Kent, and Fabrice. The postponement forced me to miss the launch, but I later spoke with Gilles by phone. He said that Oliver, the model, got his kite tangled and "busted" at the starting line. Paul "passed out" about halfway through the trip, falling off his board facedown in the water, arms akimbo. Gilles fished him out, apparently saving his life. I spoke to Paul, too, who said he flew back to Florida the next morning because he was peeing blood. Extreme!

All in all it was a rough ride, Gilles said, but a clear triumph. The party arrived at 6:38 p.m., after eight hours and 38 minutes on the water. The sun had set by then, and it was too dicey to kiteboard all the way to shore, so they stopped 500 feet short of Cuban sands and took the boats in. I spoke with all five of the kiteboarders and got the same story every time: They made it near land, and for them this represented success and the completion of a new world record. Since it was dark and getting dangerous, they took their kites down, got into the boats, and rode them ashore. The seas remained far too rough even for boat passage back the next day, and two people flew back with Paul. The rest stayed an extra day, then crossed by boat back to Key West over the still-windy waters, taking five and a half hours and slamming into 15-foot waves.
"Everybody was extremely silent on the way back," Gilles said. One woman bruised her ribs.

A few days later I got a press release from Red Bull, which, um, recalled things differently. It had the three kiteboarders "arriving in Cuba at 5:55 p.m., one minute before sunset." Later I got a tape of the "video news release" put together by Oceanwatch—the company responsible for documenting the event—with a few minutes of highlights, and some comments from Neil and Kent. This footage is what went out over the wires, and was picked up for use by more than 40 local news broadcasts around the country. In the video, oddly, the three kiteboarders surf all the way onto the shore and celebrate with high-fives in light that is obviously pre-sunset. The release didn't say so, but the scenes of the boarders' "arrival"—unbeknownst to the folks who used the footage in their evening news broadcasts—had been shot the following day. All of which brings us to the final lesson of murketing, which is simple: If no one is paying attention, fib.

Asked about all this, Cortes called the video release "a huge mistake not in line with our brand values." But it doesn't really matter. Whatever the facts, the truth is that any Red Bull drinkers, or potential drinkers, who might be impressed by the Cuba crossing are going to get exactly the message Red Bull wants them to get. People who are receptive to the idea that Red Bull's involvement makes the drink cool will decide that without additional prompting. Other Red Bull fans will never hear about it, or just shrug when they do, and dream up some other, murky reason to buy the next can. Hey, they won't even need to see a commercial.

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