---
title: "Red Bull Leaves Over 7 Billion Yuan Market Space for Competitors!"
description: "Recent news about Red Bull has been rife with speculation. Although no final decision has been made, the contract renewal is indeed in a deadlock between the two parties. Many in the industry believe this cannot be resolved overnight, as this year Hua Bin itself has even reduced Red Bull's annual performance targets. The proposed \"post-Red Bull era\" brings mixed feelings. The renewal is unlikely to be resolved soon, sales are declining, some factories have closed, and some distributors have no stock. This turmoil has inadvertently created a gap of nearly 7 billion yuan annually! It is understood that Hua Bin has internally formulated a \"natural sell-through\" strategy for Red Bull..."
author: "谭长春"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-05-04"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/red-bull-leaves-over-7-billion-yuan-market-space-for-competitors-077a240b/"
markdown: "https://xinjignxiao.com/en/articles/red-bull-leaves-over-7-billion-yuan-market-space-for-competitors-077a240b.md"
original_source: "https://mp.weixin.qq.com/s/aRGCZCctXdjKkfT-aOtKLg"
translation: "https://xinjignxiao.com/zh/articles/%E7%BA%A2%E7%89%9B%E7%BB%99%E7%AB%9E%E5%93%81%E7%95%99%E4%B8%8B%E4%BA%86%E8%B6%85%E8%BF%8770%E4%BA%BF%E7%9A%84%E5%B8%82%E5%9C%BA%E7%A9%BA%E9%97%B4-077a240b.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/red-bull-leaves-over-7-billion-yuan-market-space-for-competitors-077a240b/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Red Bull Leaves Over 7 Billion Yuan Market Space for Competitors!

> Recent news about Red Bull has been rife with speculation. Although no final decision has been made, the contract renewal is indeed in a deadlock between the two parties. Many in the industry believe this cannot be resolved overnight, as this year Hua Bin itself has even reduced Red Bull's annual performance targets. The proposed "post-Red Bull era" brings mixed feelings. The renewal is unlikely to be resolved soon, sales are declining, some factories have closed, and some distributors have no stock. This turmoil has inadvertently created a gap of nearly 7 billion yuan annually! It is understood that Hua Bin has internally formulated a "natural sell-through" strategy for Red Bull...

**Introduction:** Recent news about Red Bull has been rife with speculation. Although no final decision has been made, the contract renewal is indeed in a deadlock between the two parties. Many in the industry believe this cannot be resolved overnight, as this year Hua Bin itself has even reduced Red Bull's annual performance targets.

The proposed "post-Red Bull era" brings mixed feelings.

The renewal of Red Bull's contract is unlikely to be resolved soon, sales are declining, some factories have closed, and some distributors have no stock. This turmoil has inadvertently created a gap of nearly 7 billion yuan annually! It is understood that Hua Bin has internally formulated a "natural sell-through" strategy for Red Bull, with the 2017 target sales reduced to around 16 billion yuan. A preliminary calculation shows that Red Bull's functional beverage leaves behind a market space of over 7 billion yuan.

And the second brand in the industry, Dongpeng Special Drink, sells only a little over 3 billion yuan a year! It seems that Red Bull is truly ceding market share to industry followers, which is like giving performance bonuses to other brands in the industry!

The Red Bull renewal issue has been fermenting, and recently some people have even started shouting about the "post-Red Bull era"! Red Bull, a legitimate international beverage brand, China's number one functional beverage brand, and one of the most expensive beverage brands, a brand that people naturally think of when tired or sleepy, now faces an uncertain future in the Chinese market. This is truly bittersweet! The sad part is that an international big brand's future in China is unpredictable; the happy part is that the competitive landscape of the industry may finally change after so many years, giving certain opportunities to followers in the industry.

What does the owner of the Red Bull brand think?

According to an insider friend, this is definitely not a problem that arose overnight, and it is clearly a matter of interests. Red Bull has been in China for over twenty years, earning a lot of money, but how much has it distributed? The interest division over more than twenty years has had an irreconcilable impact on the renewal, so the stalemate is inevitable.

But Red Bull is an international brand with global influence. It has been cultivating the Chinese market for over twenty years, and its category, brand, channels, operational methods, consumer awareness, and purchasing habits have already been formed. It has always been a lonely winner with no competitors. It is said that even with many followers rising, Red Bull still firmly holds about 70% of the domestic market share! It is only in recent years that some domestic brands have risen, such as Dongpeng, Lehu, etc., but they are still far behind Red Bull's annual sales of over 23 billion yuan.

Red Bull also hovered below 1 billion yuan for many years. During the SARS outbreak in 2003, the sudden huge demand for vitamin products gave Red Bull a boost, and it took off from there, soaring ever since. Red Bull's original target consumers were mainly drivers, nightclub workers, internet cafe users, and exam takers, which are very rigid needs for relief and refreshment. So, after so many years of market cultivation, Red Bull has enough capital to continue being bullish. We also see that even though it has sold only this one product for so many years, Red Bull's brand freshness is well maintained, so it has not aged and is still a very healthy and vibrant brand.

Perhaps the owner of the Red Bull brand feels that with enough brand influence, they can afford to be uncompromising in negotiations with Hua Bin during this renewal?

But we must ask: Red Bull's current performance is over 23 billion yuan, while Hua Bin has already prepared its own brands like Zhanma, as well as others like VITA COCO, Capri-Sun, and VOSS. If these brands siphon off tens of billions of yuan in sales each year, over a few years, the resources and capabilities that Red Bull has cultivated in the market will all be in Hua Bin's hands. Can these tens of billions or even over 20 billion yuan in sales withstand years of attrition? Haven't we seen several major beverage brands in China fall and never recover? Jianlibao and Xurisheng are examples, aren't they?

From this perspective, Red Bull believes its brand is strong and its product is great, so it is not afraid!

Can Hua Bin's Zhanma gallop?

Hua Bin's ability to achieve such a huge single product as Red Bull in China should be attributed to great effort and has achieved tremendous success. Given Hua Bin's capability in operating Red Bull, even if it were another ordinary brand, could it have achieved such great results today? Perhaps that is hard to say.

Hua Bin has cultivated the resources and capabilities to do functional beverages in China and laid a good foundation. But if Red Bull no longer cooperates with it, what are the chances of success for Hua Bin to operate its own brand and sell it?

**Channels may be one of its major advantages,** but it seems that Hua Bin has adjusted its channel approach for Zhanma, reportedly directly engaging with terminals. Perhaps the previous distribution channels, when facing a brand not as strong as Red Bull, have encountered consumer-level problems, i.e., poor sell-through?

Of course, **Hua Bin also has the marketing organization built over the years.** Red Bull once had a phenomenon rarely seen in China's FMCG industry: many branch general managers who had been with the company since the early 1990s when they started Red Bull with Mr. Yan had not changed for so many years! On one hand, this provides convenience for switching sides or no longer doing Red Bull, but on the other hand, the lack of combat effectiveness due to resting on past laurels, and the loss of Red Bull's brand momentum, are these major issues for Hua Bin's Zhanma to go to war? It is said that Hua Bin's marketing organization has begun to loosen, with personnel voluntarily jumping ship, and Hua Bin has also transferred some frontline staff to distributors. Of course, the departure and replacement of general managers and sales heads in recent years cannot be ignored.

Hua Bin, leveraging Red Bull's original channels, personnel, and customer resources, does not seem to be a one-time solution?

Are Dongpeng Special Drink and Lehu both special? Are they both eyeing the market?

These two newcomers to the functional beverage industry have indeed carved out a path and achieved sales of several billion yuan. One cannot help but admire the teams of these two companies!

Although the traditional beverage industry is not a high-tech industry, because it is a fast-moving consumer good, it needs to be embedded in the minds of mass consumers, and it must be delivered to consumers quickly, well, and economically. At the same time, due to full competition, it truly reflects the market capability of the enterprise.

Although Dongpeng and Lehu products do not have much personality, emotion, or cultural appeal, and it is harder for them to give consumers social prestige and noble labels at the societal level, that is, they are just "beverages," there is always demand space for functional beverages, and competition has been relatively favorable in the consumer goods industry. So, through advertising, sales, promotions... they have achieved sales of several billion yuan.

But if Red Bull does not renew with Hua Bin, can Dongpeng and Lehu take the opportunity to "rob" the market? Perhaps Red Bull will no longer do well and will "release" some market space. Even if Hua Bin's Zhanma enters the market quickly, consumer awareness still takes time, which will leave some space. Additionally, if these two brands seize the opportunity to rise, invest heavily, and cultivate carefully, they can gain a part of the market. Perhaps the opportunity for these two has come?

Functional beverages actually have many issues to consider.

Of course, for functional beverage companies to achieve breakthroughs, they will encounter many problems, such as whether the taste of functional beverages can be improved? What impact will consumption upgrading have on functional beverages? Will mobile internet pose insurmountable challenges to traditional methods? At the same time, have consumers' consumption concepts, behaviors, and habits changed dramatically, making traditional functional beverage consumption trends and operational methods obsolete? Is it difficult to see a dark horse emerge solely through channel warfare? These are all issues that need careful consideration and breakthroughs.

So, who will ultimately win among Red Bull, Hua Bin, Dongpeng, and Lehu? Who will laugh last? Perhaps it is not yet possible to determine.

Back to the main topic, it is unlikely that Red Bull will be directly acquired by a domestic brand in the short term. From the above analysis, if Hua Bin Group's Red Bull renewal is unsuccessful, it is difficult to determine who will win in future market operations. But as market conditions change, the Red Bull brand will indeed gradually decline in China after this turmoil. If Hua Bin's Zhanma also finds it difficult to succeed in a second venture, perhaps that will be the opportunity for domestic brands like Dongpeng?

In the past, too many international brands acquired Chinese national brands, and some even shelved the hard-won national brands after acquisition. In the future beverage industry, can we see cases where domestic brands acquire international brands and succeed?

But that would be too dramatic!

Appendix: Brief differences among the major Red Bulls:

> **Sales in Southeast Asia belong to Thai Red Bull,**
>
>
>
>
> **Mainland China belongs to China Red Bull, with basically the same formula and taste as Thai Red Bull, packaged in tinplate.**
>
>
>
>
> **Other regions belong to Austrian Red Bull, which has been adapted to European and American tastes as a carbonated beverage, packaged in aluminum cans.**
>
>
>
>
> **Austrian Red Bull, Thai Red Bull, and China Red Bull each have different sales territories and marketing strategies.**
>
>
>
>
> **Strictly speaking, the origin of the Red Bull brand is Thai-Chinese Xu Shubiao.**

Introduction: Tan Changchun, committed to selling any product as a fast-moving consumer good. General Manager of Huaxia Cornerstone Marketing Consulting Company, Group Chief Consultant, Special Expert Consultant of Kotler Consulting Group, Project Director of TNS Market Research Consulting Company. Founder of the integrated marketing system. Well-known marketing expert and trainer; specially invited lecturer for China Marketing Director Qualification Certification Exam, specially invited lecturer for "Frontier Lectures," gold medal lecturer of the training expert group of "Sales and Market," and specially invited lecturer for marketing director classes at several top domestic universities.

Weibo: http://weibo.com/1159426107

WeChat public account: chnstone1

China Sales Force: http://t.cn/RIV73Dd

-END-


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671