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Supplementary handout for presentation on Red Bull GmbH 11 October 2011 Jack Potter Introduction Austrian drinks company,

any, Red Bull GmbH, widely regarded as founder of energy drinks market. Established in 1987, incorporated in Austria with worldwide operations based in Salzburg, split between three owners and privately held, initially funded by original private investment of $500m. 4.2bn unit sales in 2010 (up 7.6% on 2009) and $3.785bn turnover in 2010 (up 15.8% on 2009).

SWOT Analysis Strengths: market leadership in developed markets, strong marketing and customer brand awareness. Weaknesses: over reliance upon small product base, lack of product differentiation from competition. Opportunities: expansion into/concentration upon expanding/developing markets eg. BRIC group, extension of product line, merger/acquisition with major competitors in established markets. Threats: changing consumer preferences due to increased awareness of health and wellbeing.

Expansion into/concentration upon growing economic markets Focus proven successful marketing strategies upon growth economies. Maintain market leader status. Consider markets with high GDP growth as basis. Increased wealth and expendable income. Assisted through increased urbanisation and migration towards cities, improved infrastructure and distribution networks, emergence of technological marketing channels such as television and internet. Reliance upon proven methods of promotion tested in Western markets. Encourage retailers to build customer brand awareness, establish attractive consumer image and lifestyle of Red Bull products. KPMG Global Frontiers Location & Expansion Advisory Services, newly launched. Assist with decision making process for international relocation and expansion. Identify optimal location and available investment incentives offered by local government. Assist in analysis of local marketplace, business costs and taxation as well as key market players such as suppliers and competitors. Audit can offer comfort to group that performance is true and fair reflection, effective financial controls in place. KPMG is true international operation; e.g. Liverpool office has various international clients and is experienced with concept of group reporting. KPMGs international offices work in partnership to assist with tax. Rates in new markets, tax incentives and governmental assistance.

Develop additional product lines to expand share of lucrative soft drinks market Over reliant upon success and appeal of original product. Whilst successful/revolutionary at origin, product remained unchanged in 20 years. Product maturity, necessary to diversify/update product line. Previous ventures, sugar free/Diet market, concentrated energy shot, reasonably successful, remain reliant upon appeal of highly caffeinated energy drinks to target consumer market e.g. young males, students, alternative lifestyle. Despite strong brand image, entry into conventional soft drinks or bottled water markets has proven difficult in past, evidenced by Coca-Cola Groups Dasani and Virgin Groups Virgin Cola, despite financial resources. Consumer values towards healthy living suggest move into traditional sports drinks market, competitor to Lucozade Sport/Gatorade, success of Coca-Cola Groups Powerade, evidence of potential for movement into this market sector. Potential success assisted by strong brand recognition, reputation for high performance and energy, suggested concentration upon lucrative athletics/football market, movement from current image of chemical/caffeine content, towards more appealing concepts to athletes of rehydration/electrolytes. Retain concentration upon sponsorship e.g. football teams, tournaments and marathons, as well as online marketing and the emergence of social networking as advertisement e.g. Facebook/Twitter. UK soft drinks market worth 13.88bn in 2010, up 5.8% on 2009. Sports and energy drinks remain fastest growing sector, worth 1.50bn. Energy drinks =73%; sports drinks =27%. Sports drinks grew 13.1% in 2010, worth 260m. Growing market; 85m litres in 2004 to 160m litres in 2010.

KPMGs advisory services e.g. project management. Transactions and restructuring. Assist with strategy development: market and competition intelligence, strategic options, decision making, target business models, integrated with tax and audit to provide regular feedback. Consider KPMGs business contacts e.g. colleagues, ex-employees, and clients with experience in retail, manufacturing and distribution to assist in networking and facilitate growth of product range.

Acqusitions/mergers with competitors to consolidate market leader status In 2010, UK profits down 44.2% to 8.7m; 15.7m in 2009. Per UK Sales Director, Jamie Rake, slowdown due to economic and competitive environment and launch of 100+ energy drinks within UK marketplace in previous five years. Per Nielsen data, 2011 Q1 and Q2 sales up 5.2% on previous six months; largest competitors, Rockstar and Monster, growth of 49.2% and 170.1%, respectively. Strength of competition is apparent. Whilst economic climate has obvious impact on sales of nonessential products, fall in profits and market share, threat to position as comfortable market leader. Mirrored in established marketplaces; US market share decreased from 47% in 2008; 43% in 2009; 35% in 2010. Market share of Hannes Natural Corporations Monster and Coca-Cola Groups Rockstar has grown year on year. Nevertheless, remain market leader in established marketplaces, due to brand strength, customer recognition; financial resources available to rectify current situation. Largest competitors may be unavailable, possible to arrange mergers/acquisitions of smaller competitors within marketplace. Buyout of small number of minor competitors, similar financial effect as takeover of single major competitor. Compatible with previous suggestion of expansion into growth markets through takeover of existing competition? Dominate marketplace; monopolisation? Previous expansion funded through capital generated from reinvestment of retained profits. Feasible to fund through debt? Equity is unattractive. Privately owned by initial investors, would not relinquish ownership when success to date is considered without need for external investment. KPMGs advisory services in transactions and restructuring may assist business with robust balance sheet and predictable cash flow. Assist with selection of investment opportunities, secure external finance from lenders, due diligence, ensure integration amongst entities. Tax services assist assess tax risks associated with investments, mitigate tax costs of takeover. Audit services assist through assessment of financial health and management strength, truthfulness of financial statements.

Conclusion Recommend expansion into growth markets such as BRIC economies. Developing countries, increased expendable income, industrial development (manufacturing/distribution/advertising). Maintain position as worldwide market leader, benefit from shift towards developing world and large populations, as well as appeal of energy drinks as Western lifestyle of young urban demographics. Answer any questions/offer justification of recommendations.