Red Bull's Cola Experiment

How much can the entry of a successful brand from another realm reinvigorate a declining category? Come June, we’ll be treated to a fascinating attempt to answer that question.

That’s when Red Bull plans to venture forth with – of all things – a cola. Not just any cola, but an all-natural cola. And not some drab, goody-goody kind of natural cola, but one claimed to be the only one to include not just kola nuts but coca leaves, which, after all, shared equal billing in defining Coca-Cola a century ago. A natural, coca-leaf-containing cola with a mouth-watering array of other ingredients as well: lemon/lime, clove, cinnamon, cardamom, pine, corn mint, galangal, vanilla, ginger, mace, cacao, licorice, orange and mustard seeds, along with natural flavors from plant extracts, sugar from beets and natural caffeine from coffee beans. By Red Bull’s account, an all-natural, rich-tasting, extremely refreshing cola.

But hey – a cola.

Have they gone crazy over in Salzburg, Austria? As of this writing, when Red Bull North America had just offered the first details of the new brand, opinions among distributors ranged from stroke of genius to farcically delusional.

But one can – and this column, at least, will – construct a case for why this product could provide a jolt of energy to a huge but steadily eroding category that hasn’t responded well to the flavor extensions, sweetener experiments, food match-ups, online communities and other ploys offered in recent years by Coke and Pepsi.

Before we get to that, though, we need to mention Richard Branson. He’s the guy, of course, who famously guided a tank over a sea of Coca-Cola cans in New York’s Times Square in the late 1990s as camera shutters clicked to herald the advent of Virgin Cola. Sadly, that likely was the high point of the venture. Virgin, a hot brand in other segments, quickly got blown out of the water by the reaction of the cola giants and Virgin’s own missteps.

The gruesome example of Virgin Cola – one that hollers, Beast-like to Belle, “Don’t go into the west wing!” – did its share to discourage further entrants into the cola realm. But even before Red Bull disclosed its own cola plans, something interesting had begun to happen. After years of observing an unspoken dictum of not venturing anywhere near a cola, several boutique soda brands – from Grown-up Soda (GuS) and Jones to Virgil’s – have recently begun to edge into that fraught area, pulled by fans looking for a fresh take on a classic flavor. So wary was GuS co-founder Steve Hersh of making the move that he tells me didn’t respond to those requests until another, less risky endeavor – a similarly-demanded ginger ale – quickly rocketed up to his #2 sales spot. Significantly, so untethered have the major ginger ales and colas become from their origins that GuS’ label depictions of ginger roots and kola nuts seem to catch their imbibers off guard.

Against this backdrop, one can at least understand the lure of this category for Red Bull. Proponents of energy drinks often view them as essentially the new guise of caffeinated colas, as entitled to a century-long run as the colas enjoyed. Attach a cola flavor to an energy-drink brand, and you give consumers cover to continue to enjoy their cola habit (much as Starbucks lattes can be seen as conferring social acceptability on adults’ desire to consume milkshakes in broad daylight). That’s hard to pull off without some kind of product differentiator, but in an RB Cola-friendly world, that’s where the all-natural base of traditional, rich ingredients would come in. Assuming Red Bull has done a craftsmanlike job of formulating the new line – and Red Bull creator Dietrich Mateschitz’ way with herbs in his formulation of Carpe Diem botanic waters suggest he is well up to the job – the new brand could bring a product revelation to consumers. And at a time that Coke and Pepsi have been reluctant to yield even to some consumers’ preference for a cane-sugar version of Coke or Pepsi in the U.S., that would be quite impressive, indeed.

Given the category’s history and current outlook, it’s still a challenging proposition for Red Bull. The doubters could well prove right. But one should never underestimate a formidable marketing organization like Red Bull – especially one with as strong a route to market as its distribution network (something Virgin lacked). That’s not even to mention the younger-skewing energy brands like Monster and Rockstar, which have limited their forays into colas to subtly branded line extensions. If they decide to throw their hat into the ring, too, well, things could get really interesting.

Longtime beverage-watcher Gerry Khermouch is executive editor of Beverage Business Insights, a twice-weekly e-newsletter covering the nonalcoholic beverage sector.