The UK arm of global energy drinks giant Red Bull has laid the blame for a 2.5% drop in turnover last year on “difficult economic and competitive factors.”
The company’s accounts for the 2013 calendar year posted at Companies House show turnover fell from £238.5m 2012 to £232.5m last year, which managing director Andrew Shaw noted was “slightly below expectation.”
The fall in turnover came even though the company invested 5.5% more in its marketing than it did the previous year - £53.5m compared with £50.7m.
However, management declared “a solid year of trading” during a year in which profit climbed nearly 45% from £8.1m to £11.8m after tax as cost of sales fell from £148m to £135.8m.
The year saw considerable investment in NPD, with the launch of the Red Bull Editions in three variants - cranberry, lime and blueberry and several on-pack campaigns, and the company organised several national events such as The Red Bull Revolution of Sound at the London Eye, and Harbour Reach in Liverpool.
The first quarter of 2014 saw the launch of Red Bull Zero Calories, backed by a £2m marketing push that kicked off in April. The ad blitz included outdoor, print, digital and sampling activity, which the company stated would have helped achieve a “good start” to the year in the first quarter of 2014.
The company operates in a soft drinks sector that has come under pressure from the anti-sugar lobby, raising questions about long-term growth sustainability - hence the launch of Red Bull Zero Calories as a sugar-free option.
A Grocer study of the energy drinks market in June found that pricing across the industry was coming under pressure.
Red Bull remained the priciest in the market at £4.63 a litre, but was finding increasing competition from brands like Rockstar, Monster and Relentless retailing for about half the price.
In the year to the end of March, The Grocer found that Red Bull had cut prices by 4.3%, a reduction the company put down to the introduction of price-marked packs and lower prices in forecourts and motorway services.
The accounts cited its key ongoing risks as the potential introduction of new energy drinks and other beverages by other companies, changes in consumer preferences, perceptions and spending, weakening economic conditions and consolidation in the company’s customer base.
Red Bull Company, which also distributes the Monsoon Valley alcoholic drinks brands in Great Britain, increased its headcount from 188 to 230 personnel during the year as a result of “the internalisation” of its external sales force team.
Shaw said in the accounts that the directors were confident the business would continue to adhere to their projected long-term plans.