The RED BULL story: how world’s top energy drink began in Thailand, but it took an Austrian to make it a global phenomenon

Krating Daeng

A label on the bottle bears an illustration of two red wild gaur – or Indian bison, the world’s largest bovine species, which is native to the Indian subcontinent and Southeast Asia – about to butt heads before a yellow sun disk.

Inside is a sickly sweet, vaguely medicinal-tasting drink that contains caffeine, taurine, glucose, B vitamins and various other ingredients.

The product is called Krating Daeng, which was introduced to Thailand in 1976 by the ethnic Chinese entrepreneur Chaleo Yoovidhya and later transformed for the international market into Red Bull, now the world’s leading energy drink.

Within a year of its introduction in 1976, Krathing Daeng’s sales had overtaken all but one of its competitors to reach second spot behind the Japanese drink Lipovitan-D. The most important factor behind its rapid rise was Chaleo’s unconventional marketing, which saw him ignore Bangkok, home to wealthier consumers. He positioned Red Bull to appeal to labourers and blue-collar workers: a low-cost product advertised heavily with popular giveaways to the likes of truck drivers, construction workers and shift workers.

Chaleo Yoovidhya was the Thai billionaire who created a global brand with the Red Bull energy drink, which has given millions of party-goers, students and shift workers a caffeinated jolt. It spawned an industry of caffeine-laced pick-me-ups, which in 2011 was reportedly worth over $42 billion .

A bottle of Krating Daeng showing two red wild gaur about to butt heads in front of a yellow sun. Photo: Shutterstock

Energy drinks, which come in several distinct brands, are hugely popular in Thailand, where they are sold in near-identical bottles for around 10 baht (30 US cents) each at ubiquitous 7-Eleven outlets, corner shops and kerbside kiosks. Their advertising is targeted at low-paid workers enduring long hours: taxi, tuk-tuk, truck and bus drivers, and construction workers.

Yet despite the plethora of alternatives, Phakhaphon has stuck by Krating Daeng, whose name translates roughly as “red bull”.

“It smells good and tastes good,” he says. “Some other brands give me heart palpitations.” With Krating Daeng, whose caffeine content is 32mg per 100ml, the pick-me-up effect “isn’t instant, but gradual,” he says.

The third of five children born into a poor Chinese-Thai family in the northern province of Phichit in 1923, Chaleo was poorly educated and worked with his parents duck farming and fruit trading before moving to Bangkok to help his brother run his chemist shop and becoming a salesman selling antibiotics. He learnt much about importing and distribution which would help him later. In the 1960s the scientifically minded Chaleo resigned to set up a company, TC Pharmaceuticals Industries, in the old quarter of the city to make antibiotics. He began tinkering with a formula for an uncarbonated energy-boosting drink loaded with caffeine, an amino acid called taurine and a carbohydrate, glucuronolactone. After years of work the result was Krathing Daeng, or “red bull”.

“Chaleo started out as a medicine salesman like us,” says Winai Osathavoranun, a Chinese-Thai pharmacist who runs a drug store in Bangkok’s Chinatown and is also the son of immigrants. “He saw an opportunity. Back then there was only a Japanese energy drink and some no-name mixtures on the market.”

An undated photo of Thai billionaire Chaleo Yoovidhya, born in Pichit Province, Thailand 17 August 1923 married firstly (five children), secondly (six children), whom died of natural causes at age 89 on 17 March 2012. Photo: AP

That Japanese drink was Lipovitan D, which remains popular in Thailand. Originally introduced in Japan in 1962, the drink was first brought to Thailand by Japanese expats who came to oversee operations at the local factories of Japanese companies.

Many Thai workers, too, developed a penchant for the energy-boosting Japanese concoction, which gave Chaleo an idea. He tinkered with Lipovitan’s recipe and made a sweeter version to appeal more to local taste buds.

A Krating Daeng advert from 1976 showing workers consuming the drink.

Yet Chaleo’s tonic, which would one day come to dominate the global energy drink market, wasn’t an overnight success.

“At first it was not very popular, actually,” Saravoot Yoovidhya, one of Chaleo’s 11 children and the CEO of T.C. Pharmaceutical, told a Thai newspaper in 2015. “It was quite different from others in the market, and [my father] focused first on upcountry [inland] markets rather than in the cities where other competitors concentrated.”

If Chaleo was a good pharmacist, he was an even better salesman. He designed the logo for his drink, which was then still regarded more as medicine than a refreshment, with an inspired flair for marketing. The two charging bison evoked the lively spirit of the bull fights that have long been popular in parts of rural Thailand. It proved to be a winning formula: iconography with bulls steeped in mythological undertones wedded to the mystique of rejuvenating concoctions.

Bottles of Classic Krating Daeng in a Thai supermarket.

For some early customers, Winai says, Krating Daeng held a special aura of sorts. In traditional medicine, certain animal parts and bodily fluids are believed to have aphrodisiac effects. Some Thai men believed the taurine in Krating Daeng was derived from the testicles of bulls.

Taurine, an organic compound that aids muscle functions and boosts endurance, was named after “taurus” (Latin for “bull”) and can be extracted from bull semen. Yet contrary to wishful thinking by some Krating Daeng aficionados, the drinks’ taurine content has always been produced synthetically.

“[Red Bull] is a textbook example of how to convert a brand icon with rich emotional meaning into marketing tactics which reinforce that meaning” – Martin Loewe, Bangkok-based marketing professional

Chaleo knew his upcountry market well. A 1970s sepia ad for Krating Daeng shows two labourers relaxing on a wooden platform in a rural setting while heartily downing the drink from tumblers.

The drink, a caption explains, mixes well with whiskey and also comes in solid form as pills

Chaleo didn’t stop there. Soon his company began promoting its tonic to fans of Muay Thai (Thai boxing), the country’s beloved home-grown sport. Over time, Krating Daeng came to be closely associated with the fighting sport through the company’s sponsorship of high-profile champions and boxing events.

Chaleo, a recluse, was Thailand’s third-richest man, ranked by Forbes magazine as the 205th wealthiest man in the world this year with a net worth of $5bn (£3.2bn). In 2011, Red Bull, based in Fuschl am See, Austria, sold more than 4.6 billion cans round the world with UK sales of over £230m per year.

In 1982, the Austrian entrepreneur Dietrich Mateschitz became aware of tonic drinks” popular throughout the Far East, and on a visit to Thailand the then Blendax toothpaste salesman stumbled across Krathing Daeng as a cure for jet lag during his frequent business trips. Then, Chaleo’s big break came in 1984. During a visit to Thailand that year, Dietrich Mateschitz, a globetrotting Austrian marketer who was selling toothpastes, approached Chaleo with an offer: to set up a company in Austria to sell the energy drink abroad with a proposal to carbonate the drink and introduce it globally.

Austrian businessman and Red Bull CEO Dietrich Mateschitz at the Formula One Grand Prix in Austria in 2015. Photo: EPA

Red Bull GmbH was founded. Both invested $500,000 with each owning 49 per cent and the remainder going to Chaleo’s son, Chalerm. Mateschitz fine-tuned the recipe for the Western market and started selling Red Bull in Austria in 1987. With more than double the caffeine in Coca-Cola, “Red Bull gives you wings”, as Mateschitz’s slogan put it – an apt description of the drink that would take revellers into the dance-crazed ’90s. Cocktails such as Vod-Bombs, Jumping Jack Flash and Liquid Cocaine were concocted using it.

For foreign consumers Mateschitz changed the name of Krating Daeng to Red Bull. He kept the drink’s core ingredients and much of its original flavour, but carbonated it to make it more appealing to international tastes and function as a mixer for alcoholic drinks. He ditched Chaleo’s medicine bottles for eye-catching silver-and-blue aluminium cans.

Different sizes of regular and sugar-free Red Bull produced for the Western market.

Finally, rather than target low-income earners, Mateschitz decided to market the new energy drink to an upmarket clientele of young party-goers, adventure seekers and extreme sports enthusiasts. Fun-loving young people still comprise Red Bull’s core customer base.

“When we first started, we said, ‘There is no existing market for Red Bull, but Red Bull will create it,’” Mateschitz told Forbes magazine in 2005.

Mateschitz set about finding new marketing strategies. Some observers say that Red Bull’s branding was revolutionary, calling it an “anti-brand” strategy. The firm avoided the usual methods of marketing; by throwing parties with unusual themes and free samples, they relied on “buzz marketing” or word of mouth to promote the drink. Another tactic was to convince students to drive about in Minis or VW Beetles with a large, blue-and-silver Red Bull can on top. The company also set about promoting the Red Bull brand directly to Generation Y, the so-called “millennials”; people born after 1981 who were believed to be cynical about traditional marketing strategies. This involved recruiting “student brand managers” who would promote Red Bull on campuses by throwing parties – what has become known as “viral” marketing.

Gradually, a brand was created and cultivated which associated Red Bull with a designer image and glamorous lifestyles; it locked into youth culture and extreme and adventure-related sports, such as motor racing, mountain-biking, snowboarding and base-jumping, as well as dance music. Red Bull’s target consumer segment began to adopt nicknames for the product such as “speed in a can”, helping spread its “left-field” appeal.

Red Bull sponsorship on the car of Formula One racing driver Carlos Sainz Jnr during the SJM Formula 3 Macau Grand Prix – Qualification Race in 2012. Photo: Nora Tam

The Austrian businessman’s masterstroke was to create a lasting association – through endless sponsorships of athletes and events – between the energy surge from Red Bull and the adrenaline rush from high-octane pursuits such as cliff diving, skateboarding and air racing. The company’s Flugtag events, in which competitors attempt to fly home-made, human-powered flying machines off a pier, are being staged in an increasing number of cities around the world, including Hong Kong.

Apart from its energy drink business, Red Bull also owns a Formula One outfit and two football teams, Red Bull Salzburg in Austria and New York Red Bulls in the US, and the company sponsors numerous events including stunt air racing and the Goodwood Festival of Speed.

“It’s a textbook example of how to convert a brand icon with rich emotional meaning into marketing tactics which reinforce that meaning,” says Martin Loewe, a Bangkok-based marketing professional from Britain who specialises in start-up branding.

A participant attempts to control his craft during the Red Bull Flugtag 2016 at Kai Tak Runway Park in Hong Kong. Photo: K.Y. Cheng

Red Bull made its debut in Austria in 1987 with the slogan “Red Bull gives you wings”. Yet it was the drink’s manufacturers who would truly soar. Red Bull GmbH, the company Chaleo and Mateschitz founded, has sold tens of billions of cans of Red Bull. According to company figures, last year alone it sold 6.3 billion cans worldwide in 171 countries.

Red Bull dominates the sale of energy drinks in numerous markets, including such lucrative ones as the US, where it boasts a 43 per cent market share. In Thailand’s 32 billion baht (US$960 million) domestic energy drink market, though, Krating Daeng, which is now also sold in some health and wellness variants, has been steadily losing ground to local rivals M-150 and Carabao, both of which have emulated Red Bull’s marketing strategies.

Bottles of rival M-150 alongside Krating Daeng in a Thai supermarket. Photo: Shutterstock

Over the years, the Yoovidhya family and Mateschitz – neither of whose companies responded to interview requests from the Post – have become fabulously rich. The Yoovidhyas, who have branched out into real estate and Ferrari sales, are one of Thailand’s wealthiest families worth an estimated US$13 billion by Forbes.

In recent years, however, the family’s image has taken a hit.

In September 2012, a few months after Chaleo died at age 88, one of his grandsons, Vorayuth “Boss” Yoovidhya, allegedly crashed his Ferrari into a police officer on a motorcycle, killing him.

Thai police officers inspect a Ferrari car allegedly owned by Vorayuth Yoovidhya (not in picture) in September 2012. Photo: EPA

Vorayuth fled the scene, and later the country, to evade arrest. He remains a fugitive from justice and leads a jet-setting lifestyle abroad with the impunity often enjoyed by Thailand’s super-rich.

The Yoovidhyas have also been accused of hiding assets through offshore companies. Secret financial documents published last year in Germany revealed the methods the Thai billionaire dynasty and other rich families worldwide employ to conceal much of their fortune.

Vorayuth ‘Boss’ Yoovidhya (second right) walks with his mother Daranee (second left) during the British Formula 1 Grand Prix at Silverstone in Jun 2013. Photo: AP

The Yoovidhyas may be extremely rich, but they owe some of their fortune to poor people such as Lampoey Janplaeng. The 61-year-old sells refreshments and snacks from a rickety little shack she runs with her elderly husband at a small long-tail boat pier for commuters by the side of a fetid canal in central Bangkok.

Bottles of Krating Daeng are among Lampoey’s most popular items. She sells about 20 bottles a day, making 40 baht (US$1.20) in profits. “I have diabetes. I can’t drink Krating Daeng myself,” she says. “Have one. You’ll feel refreshed.”

Tibor Krausz – SCMP

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