SWOT Analysis of Red Bull

Doing a SWOT analysis of Red Bull to evaluate where it stands now and what it can expect for the future by reviewing their strengths and weaknesses.

Red Bull is America’s most popular energy drink, capturing almost a quarter of the country’s market and similar shares world-round. The brand itself is incredibly valuable, thanks to a long history of clever marketing strategies. While Red Bull is a big name right now, many of us are wondering what will happen to the drinks manufacturer into the future, as health concerns surrounding sugar and caffeine continue to grow.

In this article, we’ll use SWOT analysis -- reviewing the strengths, weaknesses, opportunities, and threats of the brand -- to evaluate where it stands now and what it can expect for the future.

Strengths

Red Bull's business strengths include a powerful brand and a unique, sports-based marketing strategy.

Powerful Brand

Red Bull’s biggest asset is its powerful brand. The name “Red Bull” is synonymous with energy drinks the world around. While there are several other powerful brands within the soft drinks industry -- especially Coca Cola and Pepsi -- Red Bull is perhaps the most recognizable energy drink of all, followed by Monster. The company’s strong brand image also features a strong slogan (“Gives You Wings”) and unique, color-based branding.

Marketing Strategy

Another strength is the company’s sports-based marketing strategy. Red Bull is a major sponsor of hundreds (if not thousands) of sporting events, teams, and athletes, with some events even named after the energy drink brand. As with Coca Cola’s approach to marketing, this ubiquitous presence puts the drink on the minds of consumers throughout the day, allowing it to continue dominating the market.

Weaknesses

The company does suffer from two weaknesses; namely, a limited product range and the high price tag for their primary offering.

Limited Product Range

Perhaps Red Bull’s most obvious weakness is its limited product range. Whereas most food and drink companies are diversified across multiple products, Red Bull is almost entirely reliant on its flagship energy drink and a sugar-free counterpart. This can be a positive aspect with regard to marketing -- since Red Bull is able to create laser-focused marketing campaigns -- but has numerous downsides. For starters, it puts the company at high risk of a chance in the energy drink industry (such as new, unfavorable regulations). In addition, it means the company is losing out on additional product revenue from loyal consumers.

High Price Tag

Another weakness is Red Bull’s high price point. The energy drink is marketed as a premium product, like major competitor Monster. On the one hand, this allows the company to enjoy greater profit margins. However, it also results in the drink brand losing out on sales to cheaper alternatives in the case of more budget-conscious consumers. The brand might consider dropping the price of its core offering and reducing other spending (such as marketing spending) as it continues to dominate the market.

Opportunities

Opportunities for Red Bull include emerging markets, new product lines, and healthy alternatives.

Emerging Markets

Asia and Africa are two of the world’s biggest emerging markets, where consumers’ incomes are growing quickly and day-to-day spending is skyrocketing. Whereas previously consumers in these developing countries may have avoided Red Bull due to its high price point, they may now consider purchasing the product knowing they can better afford it. As consumers continue to get richer, we can expect them to spend more on premium products like Red Bull, presenting a huge opportunity for the multinational brand.

New Product Lines

Another fantastic opportunity for Red Bull lies in new product lines. As discussed previously, Red Bull’s core revenue source is its two energy drinks (regular and sugar-free). The company may consider developing new products to cater to loyal customers. An excellent example of such products might be Red Bull-branded sports supplements, which would appeal to the drink’s sports-oriented audience. Not only would new product lines directly increase the brand’s revenue, but they would also reduce the risk of major threats due to industry dependence.

Healthy Options

Continuing on the topic of new product lines, another opportunity for Red Bull is to develop new, health-oriented products. They could certainly keep their existing energy drinks the same, but they might consider creating health-conscious offerings such as protein drinks, vitamin drinks, and electrolyte drinks. Similarly, they could consider reworking their existing products to use less harmful ingredients, and rebrand themselves in an appropriate way.

Threats

As in all industries, a major threat for Red Bull is competition. Other threats include product staleness and health-related regulation.

Competition

Competition is a big threat across all industries. However, the energy drink industry is particularly fragile, since it’s difficult for brands to protect their recipes and/or tastes. It wouldn’t be too difficult for a competitor to create a new energy drink that’s extremely similar to Red Bull in taste, price it significantly lower than the name brand, and begin an aggressive marketing campaign to steal market share. For this reason, it’s essential that Red Bull continues to maintain its strong brand image.

Product Staleness

Another threat for Red Bull is product staleness. If the brand continues to rely on two core energy drink products -- without changing their recipes -- consumers may begin to get bored of the taste. It’s probably not the best idea to change a drink that’s loved, but this threat only reinforces the importance of the brand’s need to create new products.

Health Regulations

Perhaps the scariest threat for Red Bull is the introduction of new health regulations which prevent the sale of energy drinks, or significantly reduce their profitability. In Norway, for example, drinks containing sugar have additional taxes. While some of this cost (if not all of it) is transferred to the consumer, Red Bull’s high prices are only thus made even higher. If we see similar moves across the world, the brand will have to consider making health-conscious alternatives.