Red Bull Charges Into Cola Category

Red Bull is hoping its new Red Bull Cola, debuting in Las Vegas this month, will cut into a share of the mainstream cola crowd, brandweek.com reported.

Red Bull Cola will be 100% natural and command a premium price, its formula consisting of kola nut and coca leaf. The debut comes as Red Bull has fallen behind Monster as the top energy drink in terms of volume, according to Beverage Digest. Monster owns 27.6% of volume compared to Red Bull’s 24.6%. Nielsen data, however, shows Red Bull owns 39% of dollar share compared to Monster’s 24%.

"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. "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 category has fallen considerably from its golden era, brandweek.com reported. Carbonated soft drink sales shrank 2.3% in 2007, while 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%.

The trend will present a long-term challenge to Red Bull Cola, said Beverage Digest editor John Sicher told brandweek.com. "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."

Unlike many other beverage brands outside of the Coke and Pepsi systems, Red Bull has 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," Khermouch said.

Red Bull Cola will be available in 8.4-ounce cans at bars, clubs and restaurants, as well as 12-ounce cans at grocery and convenience stores. Pricing was not revealed.

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.

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