Red Bull hopes new ‘Total Zero’ variant will give it wings after analysts warn of limited portfolio

Santa Monica-based Red Bull described the US launch of Red Bull Total Zero as a natural extension of its product portfolio, adding that, within the energy drinks category, there was growing demand from ‘health conscious’ consumers for healthier ‘diet’ products.

The new variety of the drink (pictured) is being rolled-out across the US in 8.4oz (248ml), 12oz and 16oz cans, and is also available in four packs containing the smallest size.

In March, Euromonitor International analysts warned in a Passport research report on Red Bull that one of the company’s weaknessness was a relatively limited product portfolio, compared to rivals offering numerous flavour variants and categories, and earmarked US firm Hansen’s Natural (which offers products with wholly natural ingredients) as Red Bull’s biggest threat.

Euromonitor added that despite a US market (Red Bull’s biggest) entering maturity,energy drinks were still a relatively small category compared to fruit/vegetable juice and carbonates.

Premium new offering​

Therefore, manufacturers were still working on increasing consumption and extending the audience for their products, the research firm said, a move evident in Red Bull’s Total Zero launch: the product replaces sucrose and glucose with sweeteners Aspartame, Acesulfame K and Sucralose.

Red Bull said in a statement that consumers were “seeking out zero-calorie and zero carb drink options in addition to low sugar/sugar free choices. Red Bull Total Zero answers this need, and will further invigorate the energy drink category with a premium new offering.”​

Since the reduced carbohydrate/calorie accounted for 31% of US energy drink sales across all retail channels, Red Bull said it expected Total Zero to drive further incremental sales for the brand and category.

“The energy drink category and Red Bull have a bright future as the category is still in its infancy, and is the fastest-growing segment within the beverage category: [research firm] Mintel sees the energy drink category growing to $8.9bn by 2016 (64.3% growth,”​ the company said.

Threats to energy drinks​

But IBISWorld analyst Agata Kaczanowska predicted in Novermber that energy drink sales– $2bn US in 2011 – would “slow significantly”​ over the next five years due to market saturation.

Regulators were cracking down on product marketing, she added, while new products such as energy pills and relaxation drinks – promoting a calmer method for people to retain focus at work – were increasing competition within this industry segment.

Euromonitor noted that Red Bull outperformed the overall soft drinks market in 2010-11, but warned that Red Bull had to remain relevant to its core audience (retaining its ‘edgy’ image with them), which was increasingly difficult given its status as a major global brand with mass-market success.

“New market entrants may become more attractive to the new generation of young consumers who want to be different and for whom the mass-market Red Bull may no longer be ‘cool’ or ‘trendy’ enough,”​ Euromonitor said.

“It the brand becomes too mainstream, energy drinks consumers may turn their backs on it,”​ it added, before adding that Red Bull’s popularity in night clubs could preserve its ‘cool’ factor in the off trade, at least in the short term.