Tuesday, September 04, 2007

The Pros and Cons of being a Red Bull Energy Drink Distributor

Many people recognize Red Bull Energy Drink as a phenomenon in the beverage industry. Retailers are in awe of the power of Red Bull Energy Drink. I find that these same retailers that will not budge an inch during beer cooler resets, will give Red Bull two to three shelves and a display piece for nothing (usually the Red Bull Full Bull contracts are for one case, one shelf per quarter, like I said, nothing).

Red Bull is defined by its mystique, its originality, and its significance as the de facto creator of a category. This carries over from the ranks of the supplier, Red Bull North America, and spills over into the retailer side. It kind of skips the hard working people that really built the brand into the powerhouse it is today…the distributors. I see Red Bull NA terminating beer distributors very frequently these days. Red Bull is fortifying its ranks with Red Bull only wholesalers that sell Red Bull Energy Drinks exclusive. These terminated distributors are left with nothing to show of the brand because of the biased distributor agreements from Red Bull NA. That being said, Red Bull is still a cash cow for the remaining wholesalers. Now, a look at the good and the bad of being a Red Bull Energy Drink wholesale distributor:

The Pros of being a Red Bull Energy Drink Distributor

1. Exceptional product awareness and quality.

2. Two-year shelf stability.

3. Ordering process. Freight is included in the price and the turnaround time from ordering to delivery is always less than two weeks.

4. Excellent margin.

5. POS designed for any retail establishment.

6. CMA programs for retailers.

7. Huge allowances for sponsorship opportunities.

The Cons of being a Red Bull Energy Drink Distributor

1. Red Bull Distributors are buried in a glut of paperwork. Full Bull on and off premise programs, daily sales number requests from Red Bull chain departments, and incentive programs for distributors sales forces.

2. The contract between Red Bull NA and the distributor is worthless, unless the distributor was given some sort of special, perpetual rights of the brand.

3. Red Bull Distributors received a general price increase in January and were advised not to raise the price to retailers.

4. Red Bull chain department sells different programs to different chains and retailers. Some retailers get more than others. It’s hard to keep up with who is getting what and retailers get extremely angry when they find a competitor is getting a better deal.

5. Red Bull NA wants Red Bull only van teams. In other words, separate sales forces that sell Red Bull only.

6. Coolers and display racks that were once free to the distributors now have to be paid for by distributors.

7. We used to have one representative from Red Bull NA, now we have seven different people to deal with.

We have found that our profit margin from Red Bull has been cut nearly in half by these cons, but the huge volume increases have more than made up for it in dollars. I’ll take the bad with the good any day because when its all said and done, Red Bull Energy Drink is a proven winner on the shelf.


Anonymous said...

Red Bull is too hard on their distributors and has screwed many over. People that started off with them and worked hard to promote the brand lost their distributiorships. Bad buisness.. They will continue to loose share. As in a competitive market place distributiors will not be able to meet all their demands and be competietive in price. What is a distributors incentive to hang with them? Too much bs and too many other products coming along without the hassle...

nashville superstar said...

Red Bull will be banned by the Canadian government soon enough.
it creates add in children and heart attacks diabetes and high blood pressure and a multitude of terrible health side affects.