Red Bull Adds Energy to the Cola Wars

By Kenneth Hein

March 27, BrandWeek

Red Bull is looking to add some energy to the slumping cola category. The No. 2 energy drink hopes its new Red Bull Cola, launching in Las Vegas in June, will grab a larger share of the mainstream crowd.

The debut comes as Red Bull has fallen behind Monster as the top energy drink in terms of sales volume, according to Beverage Digest, Bedford Hills, N.Y. Monster owns 27.6% of sales compared to Red Bull's 24.6%.

Unlike Coca-Cola and Pepsi, Red Bull Cola will be 100% natural and command a premium price. Its formula will consist of kola nut and coca leaf.

"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, West Nyack, New York. "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 realm has fallen considerably from its golden era. Carbonated soft drink sales shrank 2.3% in 2007, per Beverage Digest. 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%.

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

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