Red Bull Increased in Price
The value of Red Bull to a distributor is such that demand for the product gives them entree to sell secondary products to retailers, thus meaning that many distributors will toe the line.
14/12/06 Red Bull North America may be on the verge of raising distributor prices on its newest 12 oz. can.
The move comes just weeks after the company raised the hackles of distributors by charging them an additional $1.20 per case of its flagship 8 oz. can.
The price increases have raised several possibilities concerning the fate of both the price of the product, new product sizes, and the company's final destination, as well.
According to the newsletter Beverage Business Insights, distributors believe that Red Bull might roll out a 16 oz. can, one that it had only recently experimented with in the Las Vegas area, into wider distribution. Such a move would give the product a three-tiered size suite to fight fast-growing brands like Monster Energy, which has eaten into Red Bull's overall category share this year.
The jury is still out as to whether consumers will eat the price increase, as well. Red Bull distributors have not yet made their final decision regarding increasing their own prices -- while the company reportedly asked them to eat the increase, several polled by another newsletter, Beer Business Daily, indicated that they would indeed pass the cost on to their retailers.
The value of Red Bull to a distributor is such that demand for the product gives them entree to sell secondary products to retailers, thus meaning that many distributors will toe the line.
When distributors do pass along the increases, it would be up to the retailers themselves as to whether or not to charge more per can.
Meanwhile, speculation is rampant that the price jump might be a move to increase Red Bull's bottom line -- thereby adding more value if the company gets put up for sale.
