Red Bull's Asian expansion plan questioned

By Neil Merrett

- Last updated on GMT

Related tags Red bull Caffeine

Energy drinks giant Red Bull may need to reconsider its expansion
plans for the Asia Pacific region if it is to capitalise on massive
potential in the area for energy drinks, says a new report by

The consumer analyst's findings suggest that the group's market potential in Japan may not be as lucrative as that in other Asian markets like China and the Philippines. Asia's emerging economies has become one of the most significant regional markets for beverage groups. Raised living standards and an increasing amount of disposable incomes have created opportunities for higher value and luxury products like energy drinks. Euromonitor adds that it is vital for Red Bull to expand operations within the Asia Pacific region if it wants to avoid losing ground to competitors like US group Hansen Natural. In 2005, Red Bull had a 13 per cent retail volume market share in the region, becoming the segment leader. With bans and restrictions in some of its European markets, the company is keen to maintain its dominance within the region. However, Euromonitor believes the Japanese market is unlikely to prove as lucrative for Red Bull as its existing operations. "Red Bull's prime consumers are in their 20s and the large youth population in the region can potentially become energy drinks consumers in the long term,"​ the report states. With Japan boasting an increasingly ageing population and declining birth rates, the company's key demographic are decreasing. It is this decline that leads Euromonitor to remain pessimistic over Red Bull's plans for the country. "Energy drinks players have failed to find new consumers and total consumption has declined consistently since the late 1990s, and this trend is expected to continue in years to come,"​ states the report. The analyst adds that the situation is compounded by a congested market for energy products dominated by two of Red Bull's biggest rivals. Otsuka's Oronamin C brand and Coca-Cola's Real Gold are estimated to account for about 70 per cent of the Japanese energy drink market between them. If the company wishes to prise its own share of the market, it will need to invest heavily in Japan, Euromonitor advises. To better break into Japan, the company must follow in the foot steps of other brewers and beverage makers by working with local partners to benefit from local expertise, the report states. The importance of Red Bull of ensuring the company remains profitable in Asia has taken on extra resonance following recent regulatory difficulties over the formulation of its signature drink. Last year the Turkish government forced the group to reduce the drink's caffeine levels before it could be sold in the country. Red Bull is banned outright in France because health experts there said they were concerned about its high caffeine content, and that more studies were needed on two ingredients - taurine and glucuronolactone.

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