With roughly 43% market share of the global energy market, a Red Bull stock IPO would certainly attract billions in investors’ funds. A global brand that is marketed and sold in over 170 countries worldwide. It has become linked with extreme sports and is the world's most well-known energy drink brand.
But things did not start exactly like this for Red Bull, in fact, the company struggled for some years before it finally reached success. Its unique approach to business and marketing has made Red Bull one of the most valuable brands in the drinks space.
How Red Bull came to be
Red Bull is certainly one of the companies in its sector that have taken a completely different, and unordinary approach. We all know how competitive the drinks space can be, and there is a good reason why only a handful of companies have a significant market share. Red Bull was founded by two entrepreneurs, Chaleo Yoovidhya and Dietrich Mateschitz.
In the 1970s during a visit to Thailand Dietrich Mateschitz got acquainted with the energy drink Krating Daeng. He was impressed with the amount of energy the drink gave him, and how his jet lag from the trip had passed once he drank it. Chaleo was the creator of the energy drink, and the two entrepreneurs decided to form a partnership that would soon create one of the most recognizable brands in the world.
They would both combine their expertise to take the company to the next level. Dietrich would handle the business and marketing aspects of the business while Chaleo would be involved in the production. The company would be named Red Bull. Although the recipe was slightly changed since the original Krating Daeng, the difference was not significant. Dietrich suggested a different packaging, and both decided to make the drink carbonated, which added to the flavor.
Both put up $500,000 to start the new entity and so Red Bull was formed.
What was unique about Red Bull?
The single most differentiating aspect of Red Bull was its marketing approach. Dietrich wanted to market the drink as a premium product, and therefore more expensive than its competitors.
Red Bull was popular among truck drivers in Thailand, but the new marketing strategy made the drink more desirable to other target audiences. In an effort to make the drink popular among other target audiences, Red Bull saw an opportunity in sponsoring Formula 1 drivers. Its first F1 sponsorship was with Ferrari’s driver Gerbard Berger.
Soon the drink became quite popular among college students, and at parties. The company was able to expand distribution within Europe during the 1990s. To increase its brand exposure, Red Bull was presented with the opportunity of investing in an F1 team - Sauber racing team. This would allow the company to easily promote its product, in an efficient and cost-effective way. However, due to the differences between the partners, Red Bull sold its interest in the racing team.
Buying Jaguar Formula 1 racing team
During the early 2000s, the Jaguar Formula 1 racing team found itself in a complicated financial situation. Red Bull saw this as an opportunity to own an F1 racing team and continue to promote its main product this way. Due to the team’s intricate financial situation, Red Bull ended up acquiring the Jaguar F1 racing team for just $1! Over the next few years, the company would invest millions in order to develop and improve the team’s performance.
Through its Red Bull racing team, the company was able to achieve one of the best investments in marketing ever seen in the business world. It also allowed the company to continuously sponsor other sports and extreme sports.
What sets Red Bull apart?
Red Bull differs from similar companies in the industry due to its marketing approach, and how it outsources most of the production of its beloved energy drink. The company barely spends any money other than on marketing. This has proved to be a very efficient business approach, that has set the company apart from competitors.
Red Bull also does not have a unique recipe, much like Coca-cola does. Coca-cola has a top-secret recipe that is only known by a few people in the whole world.
Can you invest in Red Bull stock?
Since Red Bull is a privately held company, it is not possible to invest in Red Bull stock. Unfortunately, many investors recognize the high brand awareness, and the competitive advantages a company like Red Bull has. Red Bull GmbH, based in Salzburg, Austria, is a privately held company. It is still owned and run by Deitrich Mateschitz, the co-founder and CEO, who is one of the world's richest individuals with a net worth of more than $28 billion.
Could there ever be a Red Bull stock IPO?
Although it is different to say if investors will ever be able to invest in Red Bull stock, it does not seem like the company could go public anytime soon. The reason is that it is an extremely profitable brand that has access to capital.
There are only two reasons that could make a Red Bull stock IPO possible. One is if the owners found themselves in a complicated financial situation, and would be forced to sell their stakes. This sounds unlikely given the net worth of the individuals in question. Another possibility is if the company faced some financial difficulties. Although this is possible to happen in the future, it seems highly unlikely given the popularity of its brand, and the gross margins a company like Red Bull has.
Since the company has been private since its inception, it seems highly unlikely that we could invest in a Red Bull stock IPO. However, it is impossible to tell exactly what the future holds for the company and its owners.
Red Bull today
Today Red Bull is much more than a simple energy drink. It is one of the most recognizable brands in the world, that is associated not only with drinks but also with sports. Its presence in extreme sports has attracted a legion of loyal consumers.
Considering worldwide distribution, reputation, and brand loyalty, a Red Bull stock would certainly be a great investment choice. It sells over 8 billion cans a year, which is nearly 22 million cans every day.
Red Bull has around twenty professional sports teams sponsored by the firm, and at least 10 of them are owned by it. Watermelon, kiwi-acai, blueberry, cola, and ginger ale are just a few of Red Bull's many flavors. However, the original flavor continues to be the most popular.
What investment is similar to Red Bull stock?
There are several well-known drink companies that are public. These stocks are highly traded and offer some of the same upside, and exposure to the energy drink market. Among them, you will find well-established brands that have been able to build a legion of fans across the globe.
Over the last decade, the energy drink business has skyrocketed. If you believe that energy drinks are more than a passing trend, here are a few firms to consider as investments.
Coca-Cola (NYSE: KO)
This iconic brand has been one of the best investments over the last 40 years, and it remains one of the safest blue-chip stocks to own. It also offers its own range of energy beverages with increased caffeine, guarana extract as well as sugar levels.
However, if you enjoy Coca-Cola energy drinks, it is better to take action immediately. Coke stated in May that it was ending the project because it had failed to gain traction. Coca-Cola energy drinks will be phased out by the year 2021. The corporation does, however, own 16.7% of Monster Beverage.
Monster Beverage Corp (NASDAQ: MNST)
Monster Beverage has been one of the best-performing stocks of this century. The stock has gained over 87,500% in the last two decades, but this does not imply that all energy equities are worth investing in.
As previously stated, Monster is partly controlled by Coca-Cola, which has very significant production and logistical infrastructure. Monster acquired over a 40% portion of the US energy drink industry last year.
PepsiCo (NASDAQ: PEP)
We could not mention drinks stocks without mentioning Pepsi. One of the most well-known drink companies in the world, whose operations extend well beyond this sector. Pepsi undoubtedly has some well-known designer labels in its energy drink portfolio.
Rockstar, Bang, and Mountain Dew are the most well-known. Pepsi currently controls the number one sports drink brand - Gatorade. Gatorade has an estimated market share of 72% in the US. This shows how PepsiCo might also be an interesting blue-chip stock to own.