July 31, 2010
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Red Bull Aiming for $1.99 Shelf Price on 8-Oz Cans ....

Red Bull Aiming for $1.99 Shelf Price on 8-Oz Cans in Key Off-Premise Accounts    It’s been tuff strategic dilemma for Red Bull North America: what’s right response by energy drink price leader in environment that’s gotten far more promotional as leading rivals move thru Coke, Pepsi and Anheuser-Busch distribution networks?  Inkling of response is beginning to emerge, with distributors saying co is beginning to write retail shelf contracts with major c-stores and other off-premise accounts that are structured to move price of workhorse 8-oz can back to $1.99 from $2.19-2.29 where it’s drifted in past coupla years. 

 

No comment from RBNA, but word is that co is narrowing range of so-called VIP accounts in order to sharpen deals with select few who can really move needle, offering new price that gets them to shelf at everyday low price of $1.99 if they guarantee a certain # of shelves positioned from waist to chest level and agree to stock all RB sku’s, including 8-oz, 12-oz, 16-oz, full-cal and no-sugar, shot and cola.  That seems to mean price to retailer drops from $34 to $30 or even less in some cases.  Program addresses “biggest difficulty Red Bull has: pricing in c-stores among young adults without discretionary dollars,” observed one.  Discounted price applies only to 8-oz pack, so some distributors are hopeful enhanced shelf presence of full line will drive sales of larger can sizes and shots and thereby make program a win-win.  At same time, it reduces need to go on promo at 2 for $3.  “They absolutely will not play the $1.49 game except to recruit new drinkers,” and even there, likely won’t go below $1.79 for brief trial window, said wholesaler.  Tho most aggressive deals can take wholesaler margins on 8-oz down to 20% or even less, they get portion back via co-op, pushing margin back to 25% range.  Still, grumbled one long-time RB wholesaler:  “I can live on 25% - but not 25% after 3 or 4 months” lag for co-op payment.

 

Move comes as wholesalers report some scary recent deals by rivals in their markets, considering that energy drinks have enjoyed a decade of rich margins.  Examples: 50 free cases to 7-Eleven stores that offer whole cooler door to Monster, $21.99 per 24-unit case of Rockstar via mfr’s coupon at Costco.  Some, tho, see those rivals as pulling back on deals as year advances and extreme promos bring diminishing sales gains.


Written By: admin
Date Posted: 6/5/2008
Number of Views: 2251

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