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How does Red Bull package its product?

In the earlier market analysis of the soft drinks market, Red Bull appeared in the list of the main soft drinks suppliers by value, but not by volume. The reason why this is the case is due, in part, to the large number of cans sold by the firm, but also it is due to the unusually small size can in which the drink is packaged. Greater sales are achieved, but due to the smaller size can, they do not equate to proportionally high volumes of the drink being sold.

Image: In 2003, Rexam made 5 cents from every can of Pepsi sold. Copyright: Louis J. S., stock.xchng

Red Bull's cans are supplied by Rexam, which is the world's biggest supplier of beverage cans. Rexam makes all sorts of different types of packaging, for companies ranging from butter producers to perfume makers. But the market for packaging non-alcoholic beverages is responsible for the majority of Rexam's revenues.

For example, in 2003 it earned nearly half of its total sales from cans made for Coca Cola and Pepsi. The two multinational firms pay Rexam an estimated 5 cents (US $) for each unit of their 12 ounce (340 gram) cans, so until fairly recently when the soft drinks market saw rapid expansion, Rexam were able to rely on a steady flow of orders from its two main customers. But as the soft drinks market has expanded to include energy, health and other functional products, so Rexam has had to look elsewhere for its sales.

So Rexam now targets functional drinks producers as potential customers. Industry estimates suggest that Rexam earned $22 million on Red Bull can sales of $147 million. The drink's popularity has persuaded Rexam to look for new entrants to the functional drinks market. Red Bull cans weigh 8.3 ounces (235 grams). Other potential customers include the US based Bliss Beverage's 'Socko' which retails in the USA at an equivalent price to Red Bull, but in a can that is twice as big. Rexam also supplies a functional drink called 'Erektus' which is sold in the Czech Republic, and 'Joint Juice' (reputed to boost joint cartilage), another US entrant to the market. It is unclear whether these products would be successful sellers in all world markets.

Of course there are risks in Rexam's strategy; its major customers, Coke and Pepsi, are trying to gain a foothold in the functional drinks market by producing their own energy drinks. If Rexam create extra competition in the market by supporting other new entrants, they could antagonise the cola drink makers. But the company is on the lookout for another success story to rival the Red Bull packaging contract, so they are likely to regard some risk as inevitable but worthwhile.

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