Austria's Red Bull GmbH is reducing operations in Israel and is considering closing them altogether, after repeated failures in the local energy drink market. Red Bull Israel is halving its advertising budget and is set to fire dozens of employees.
Red Bull Israel had a 60% share of the energy beverages market until 2006. After a dispute with its marketer Tymco Beer Ltd., Red Bull switched to Seeds, but its market share was already slipping, due to a shortage in the country.
Red Bull GmbH subsequently decided to launch independent operations in Israel, run by a local manager. The objective was to leverage the brand by creating media content, but it was too late. By 2007, it lost its market leadership to XL, which is now marketed by Tempo Beer Industries (TASE: TMPO).
Several brands have entered the Israeli energy beverages market, sending prices down. Red Bull struggled to maintain its market share. According to Storenext. Israel's energy beverages market is stagnating, totaling just NIS 132.8 million in 2011. XL is the leading brand with a 58.3% market share in financial terms, Blu has a 31% market share, and Red Bull has a 7.5% market share.
Red Bull was not available for response.
Published by Globes [online], Israel business news - www.globes-online.com - on February 16, 2012
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