The battle of Thais in the Vietnamese energy drink market: “Golden bull” Red Bull fights “Green buffalo” Carabao02/03/2023
In the energy drink market, if Red Bull is a powerful old “Golden Bull”, Carabao is a young and ambitious “Green Buffalo”. Currently, the “Golden Bull” is still winning on all fronts – while leading the market share in Southeast Asia – including Vietnam and Thailand. However, with the determination of “Green Buffalo” in recent years, no one knows the future!
It is no exaggeration to say that Thailand is the ‘father’ of the energy drink niche in Asia. While the Red Bull brand is still growing and standing firmly in the world market, in Thailand, there are still potential ‘young bamboo shoots’, such as Carabao.
Born in 2022, after more than 20 years of development, Carabao currently accounts for more than 30% of the market share in Thailand and is in the early stages of expanding the market around the world. Accordingly, senior Red Bull is both the growth engine and the biggest drag of Carabao.
The expansion of the Red Bull brand has taken Thailand’s energy drink industry to a whole new level – especially in the Asia region. However, being a latecomer, to bite a ‘piece of cake’ under Red Bull’s eyelids is not easy for Carabao.
Proof: Carabao entered the Vietnamese market through a domestic distributor in 2017. One year later, the brand aims to capture 20% of the energy drink market share in Vietnam through expanding distribution networks in all provinces and cities.
However, until the end of 2022, Carabao’s name is still very faint in the Vietnamese energy drink market, along with a negligible market share.
RED BULL’S POWER COVERING ASIA AND VIETNAM
In the early 1960s, a Chinese businessman named Chaleo Yoovidhya living in Bangkok founded a company called TC Pharmaceuticals (TCP) and in 1976, the first product they sold was an energy drink with his distinctive muscular buffalo logo. Southeast Asia – Krating Daeng (equivalent to the English name red gaur).
In 1984, Chaleo Yoovidhya teamed up with Dietrich Mateschitz – an Austrian salesman working for a German company, to develop the energy drink he currently has.
In 1987, the two began exporting the energy drink under the name Red Bull abroad (with a slight change to better suit Western tastes under Dietrich’s advice). After that, each party paid $ 500,000 for 49% of shares in a joint company called Red Bull GMbH, the remaining 2% belonged to Chalerm – Chaleo’s son.
At the time that the “father” of Red Bull – Chaleo Yoovidhya died in 2012, he was 88 years old and was the third richest person in Thailand with a total fortune of about 5 billion USD.
Currently, in addition to distributing Red Bull in Asia, TCP Group has launched 9 more main brands with 6 product lines. TCP Group is currently selling in 15 markets including: 9 Southeast Asian countries, China, Israel, Hong Kong, Taiwan, Mongolia, Nepal. As for Red Bull GMbH, they will be in charge of the remaining markets.
All in all, Vietnam is a particularly important market for TCP Group. Reb Bull energy cans entered the Vietnamese market very early – in 2000, when the market was still in its infancy and did not have any significant competitors. Therefore, they quickly became the first and only choice of Vietnamese people in the first 10 years of coming here.
In the past 5 years, the Vietnamese energy drink market has started to appear new players who are both rich and young, making TCP Group feel at risk. In 2018, TCP officially opened an office in Vietnam and this is also their first international office. Along with that, they have invested 120 million USD in Vietnam within 3 years (2018-2020) to develop the fields of market research, sales, product development and distribution.
In 2017, after years of exclusively selling the Red Bull brand, TCP decided to bring Warrior to Vietnam and officially launched the grape flavor in 2018. In March 2022, TCP launched Red Bull – cold brewed coffee flavor, after many years of studying the taste of Vietnamese consumers.
According to Mr. Nguyen Thanh Huan – General Director of TCP Vietnam during the event in July 2022, although the two new TCP products were warmly welcomed by distribution partners or Warrior sold very well on the online channel and make the grape-purple flavor more popular in the market; However, both still face many difficulties and cannot dominate the market like the traditional Red Bull flavor.
Currently, TCP’s energy drink market share in Vietnam is in the top 3 and Red Bull is still the top 1 brand in the market.
“I cannot say the exact revenue of TCP Group in Vietnam market, can only reveal that: it is in the top 3 of our highest revenue markets”, said General Director Saravoot Yoovidhya of TCP Group.
According to Mr. Saravoot Yoovidhya, with a total investment plan of up to $340 million, TCP aims to double its annual revenue to $2.5 billion within three years (2022-2024). Part of the other $340 million will be invested by this group to expand production, distribution and market research activities in Vietnam.
In the next 3 years, TCP Group plans to launch 10 new products under the brand name “Krating Daeng” or “Red Bull” in markets, improving product taste and brand image according to the current grand.
“With TCP Group, Vietnam is always one of the extremely important markets. First, Vietnam’s energy drink market is large and has the leading potential in the Asia-Pacific region. Second, the Vietnam economy is developing very quickly – it is a rare economy with positive GDP in the past 2 years of Covid and returning very quickly.
Third, Vietnam is in the “golden” population period; Vietnamese people are also quite generous when they accept to spend up to 20% of their total household income for consumption. In the end, it seems that inflation has not affected Vietnamese consumers much,” said General Director of TCP Group.
According to Viettimes data, specifically: in 2019, this company recorded net revenue at VND1,013 billion, up 2% compared to 2018. However, Red Bull Vietnam’s net revenue tends to slow down in 2020 and 2021, at respectively VND 1,010.8 billion and VND 1,037.6 billion.
Notably, during this period, Red Bull Vietnam recorded a profit-after-tax ratio of over 36%. In just 3 years from 2019 to 2021, the company recorded a total profit of VND 1,176 billion.
According to statistics from Red Bull itself, they are leading the Southeast Asian energy drink market share, with about 40% in 2019 and in the Top 3 in many countries and the top 1 in Thailand with about 50% of the market share.
According to T4’s data published for 2020, Red Bull currently accounts for 43% of the world energy drink market share, followed by Monster with 39%, Rockstar with 10%, Amp with 3%, NOS 3%, Full Throttle 1% and Xyience Xenergy with 1%.
The Rise of CARABAO
Carabao Tawandang Co Ltd was established in 2001, since 2002 this company has launched Carabao Dang energy drink product with red buffalo head logo. The name “Carabao Dang” comes from Carabao Group’s association with Carabao Band, in association with Tawandang German Brewery.
Currently, the Carabao brand accounts for more than 30% of the energy drink market share in Thailand. They started exporting their products to all over the world in 2004, after gaining a relative foothold in the domestic market. Currently Carabao is doing business in about 42 countries.
At first glance, the Chairman – CEO Sathien Setthasit of Carabao Group is quite friendly – like the ‘old man next door’, but surprisingly, Carabao’s PR and marketing campaigns are nothing out of the ordinary.
In 2003, Carabao’s energy drink launch campaign was investigated by the Office of the Consumer Protection Commission of Thailand for being ‘too violent’, but won the Asia Brand Marketing Effectiveness Award of Media & Marketing magazine. In 2016, because he wanted his brand to be known to the world quickly, Carabao spent a huge amount of $39 million to sponsor Chelsea football club jerseys for 3 years.
In 2018, Carabao once again excelled when spending money for the League Cup to be renamed the Carabao Cup. A year earlier, Carabao signed a “Top Partner” contract with the English football governing body (EFL). Accordingly, the League Cup will be named Carabao Cup for 3 seasons. By 2019, Carabao continued to extend the agreement for two more seasons. Most recently, Carabao has just extended for 2 more seasons – 2022-2023 and 2023-2024.
Carabao entered the Vietnamese market through a distributor Thien Ngoc Bao in 2017. However, after a long time feeling that its beverage brand has not made much progress in Vietnam, Carabao has decided to Do your own marketing.
With a marketing line that strongly focuses on the ‘king sport’ of football, it is not surprising that Carabao came to Hoang Anh Gia Lai – a good football brand and has a Thai coach Kiatisuk in 2022.
And with what happened, as in Bau Duc’s narration, “There was only a small scandal that the whole country knew about Carabao”, then Carabao’s choice was somewhat correct. The value of the shirt sponsorship contract between Carabao and HAGL is not disclosed, but it is rumored to be up to 80 billion VND for 2 years.
Like the leaders of Red Bull, Chairman Sathien Setthasit also highly appreciates the potential of the Vietnamese market of 100 million people: “We are confident that we will succeed in the Vietnamese market because of the taste of energy drinks. Carabao is suitable for Vietnamese people. At first, we will focus on energy drinks, and then look for opportunities to sell alcoholic beverages like rice wine or vodka.”
On the Forbes rankings, Setthasit is the 1818th richest billionaire in the world and 24th in Thailand, with a fortune of about $1.5 billion.
In addition to energy drinks, Carabao Group also has bottled water – orange juice – coffee; alcoholic drink. According to Carabao Group’s 2022 Financial Report, Vietnam is Carabao’s largest growing foreign market – with a revenue increase of 60%, while Myanmar has only 4%, Cambodia 2%; Great Britain up 48%.
Carabao’s main production system is located in Chachoengsao province (Thailand) with a capacity of 1.6 billion cans and 1.8 billion bottles per year. According to published data, in the first 9 months of 2022, Carabao achieved revenue of more than 14.7 billion baht (more than 10,000 billion VND); net profit at nearly 1.9 billion baht (more than 1,300 billion dong).
According to Bau Duc, with the help of HAGL, the Carabao energy drink brand has spread to every corner of Vietnam, so “don’t worry about not selling and Carabao will be successful in Vietnam”. However, business or sales is not a 1 + 1 equals 2 story, but also a supply chain, product quality, difference, competitors…
The biggest problem that Carabao needs to solve in the Vietnamese market is “coming from Thailand, the taste and price are similar, why should consumers choose the ‘new person’ as Carabao and not the ‘acquaintance’ of Red Bull?”.