How to replace Red Bull in Europe within 3 years?

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Business case during the Final Round for the European Graduate Programme from Red Bull in 2013.
Only one night, to answer to this simple question:
How to replace Red Bull in Europe within 3 years?

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How to replace Red Bull in Europe within 3 years?

  1. 1. Business case study Market launch 1 Simon Daspe
  2. 2. To displace Red Bull as market leader for Energy Drinks in Europe within a short time 2 The challenge
  3. 3. 3 Weaknesses of Red Bull Vulnerable to regulatory control The relatively high caffeine content of Red Bull makes the brand highly vulnerable to regulatory control Still considered as unhealty product The core audience supports Red Bull sales, but a lot of people are still reluctant to consume energy drinks The different challengers TCCC and PepsiCo have their own energy drinks brands and their distribution deal with Monster and Rockstar, respectively, has added layer of pressure on Red Bull They use the same kind of marketing mix. They try to imitate the model of Red Bull Red Bull and its competitors have a « similar » positioning, if we use the same strategy it will take many years to compete and displace Red Bull The approach (1/2)
  4. 4. 4 The approach (2/2) The beachhead in Europe This market is not mature and the competition is less strong than in other european countries and Hungary is an emerging market “Sports and energy drinks remain popular despite the crisis. In 2012, consumption grew by 205% over 2007. However, the government is planning to ban the sale of energy drinks to consumers under the age of 18, according to an article on business website Pénzcentrum in June 2012.” (Compound annuel growth rate)
  5. 5. 5 Strategic approach The beachhead: Hungary Brand positioning: Healthy product and more mainstream Force Fruit Basic Facts about the product: Key components Vitamins from fruits Non-carbonated drink Guarana instead of caffeine Low calorie When the product is consumed? Off-premise (like an energy juice drink) On-premise (replacing classic juice) Target group From 18 to 90 years old people
  6. 6. 6 Added value of the product With a sales point of view • It creates a new type of energy drink (juice) • It removes the aspect of unhealthy product • It permits a communication around vitamins and fruits rather than « chemical » products • We are not obliged to sell our energy drink in a can, we can create packaging in pet plastic or carton • We can differentiate our product from competitors • We have an energy drink and we sell it as a « natural product ++ »
  7. 7. Force Fruit Development of new flavours New fruits flavour Carbonated drinks Eastern Europe Western Europe Other emerging markets 3-years strategy A bowling pin strategy
  8. 8. 8 Launch plan • Off-premise sales To convince small shops, groceries, supermarkets to sell our product we can do a kind of « piggybacking ». In soft drinks, we have a negotiation power (our core business) → Use this power to implement our new product in shelves • On-premise sales According to Michael Schaefer, Head of Beverages and Foodservices at Euromonitor international: “Though juices have long been a staple in any well-stocked bar, the reemergence of cocktail culture over the last five years has brought a surge in opportunity” […] many of them juice- based, freshly-squeezed juice remains the only choice for budding “mixologists” across the globe.” With our new energy drink, we open a new way to consume cocktail and juice in bars and night-clubs
  9. 9. 9 Sales Organisation (1/2) No change in the structure of our sales organisation Training and education of our sales people to the new product • Provide them materials to sell the product (.ppt, brochures, samples, elevator pitches…) • Prepare incentives for our customers (challenge them) Their job descriptions are flexible so they will be responsible for both soft and energy drinks Set up KPIs to encourage our sales people to sell the new product (ex. Number of customers convinced by selling our product, value and volume of energy drink sales in their total portfolio…
  10. 10. 10 Sales Organisation (2/2) Sales arguments and objectives Be sold in cooler and create new places among juices for this new kind of energy drink It will attract people attention to their other juices, it is a product with no competitor Be sold in the stores where our soft drinks are It is the future of energy drink because it is healthy and it helps for well-being We have no « direct » competitors, we want to change the way people think « energy drink » to reach a wider audience. And thanks to the lobbying of doctors, pharmaceutical industry… we will be the reference of « energy drink 2.0 »
  11. 11. 11 Key actions Try our new product in off-premise and on-premise environments To ensure that our product is attractive to final customers / creation of a new need And to create customer references Set appointments with our customers To raise awareness and interest of our customers about our new product Business development To have visibility and to become part of the energy drink environment as a brand new competitor Gather feedbacks from the field To align our sales strategy to the reality To improve our sales arguments To launch our energy drink we have to raise awareness of our resellers about the benefits of our energy drink and to educate them how they can sell it and promote it
  12. 12. 12 Financial estimation 1,80€*1,40€* Energy drink (ed) Soft drink (sf) 0,70€*0,40€* 473ml250ml *It is an estimation Source: Jorge Olson, Beverages Consultant • If we shift our sales from 100% in soft drink to 80% of soft drinks and 20% of our new product, our margin will have a significant growth • Example: 100sf x 1€ = 100€ 80sf x 1€ + 20ed x 2.5€ = 130€ → benefits multiplied by 30% By diversifying our business activity, we can generate a growth of our benefits
  13. 13. 13 Conclusion Force Fruit, an healthy energy drink On-premise: cocktail strategy Off-premise: Use of our core business to negociate facing in shops The profit made in the core soft drink business re-invested in the launch of the new product Beachhead: Hungary (year 1) Development in similar markets in Eastern Europe (Q4 of Y1) Launch in competitive markets in Western Europe (Q3 of H2) Relative growth of our margins by diversifying our business activity
  14. 14. Thank you for your attention 14 Force Fruit the power of nature

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