Red Bull

In 1982, Dietrich Mateschitz found a syrupy energy drink in Thailand called Kratting Dang. Local truck drivers drank it for stamina. It cost pennies. Mateschitz licensed the recipe, reformulated it with carbonation and launched Red Bull in Austria in 1987. Production cost per can was roughly 15 to 20 cents. Retail price was $3 to $4. Gross margin exceeded 90%. Red Bull was four times more expensive than Coca-Cola per serving and tasted worse. Mateschitz didn't compete on taste or value. He set the price high deliberately. A higher price signals exclusivity. A $3 energy drink next to a 75 cent cola tells buyers this product is different. The price itself became the marketing. Red Bull spent roughly 25 to 30 percent of revenue on marketing. That marketing went to event sponsorship and athlete endorsement. Red Bull owns two Formula One racing teams. Multiple soccer clubs and sponsors over 800 athletes globally.