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.