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Marketing Costs Wipe Out Profits

Red Bull energy drinks

Red Bull energy drinks

Despite a sales gain of 7.5 per cent in 2010, Red Bull New Zealand announced that their net profit fell from $10.71m to $888,771 in 2010 because of increased marketing and administration costs. It has been affected by the euro-kiwi exchange rates, because of their Austrian parentage and the fluctuations in rates affect the earnings.

Red Bull is an energy drink which competes with V sold by Frucor, and both companies have commented on how competitive the energy drink market is becoming. According to a 2008 report by the research firm Euromonitor, Red Bull New Zealand was ranked in the top four along with Austria, Thailand and Switzerland. A lot of the marketing is targeted at the young people associating the drink with music and the extreme sports. According to mybeverages.com there are now at least 75 brands of energy drinks in the US market alone, although it should be noted that none of the newer drinks has yet obtained more than 10 per cent of the market in New Zealand.

Global consumption of energy drinks is now about 2.4 billion litres, or in other words 19 per cent of the non-alcoholic drinks market which includes Gatorade and Lucozade.  Red Bull contains similar amounts of caffeine to coffee which is why a lot of the younger generation is drinking it, and why marketing efforts are focused on younger people.

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