There’s being first. Then there’s being #1.

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There’s being first. Then there’s being #1.

August 27th, 2009

Remember Jolt Cola? It was the original energy drink.

Created in 1985, the brand was touted as the soft drink “with all the sugar and twice the caffeine” and proud of it. In essence, it was the first “energy drink” (before anyone knew what that was) to come onto the American scene more than 20 years before anyone heard of
Red Bull.

Today, as Red Bull sells more than three billion cans worldwide (yes, billion), Jolt is little more than a novelty. How was it that the brand that essentially created a category and had a two-decade head start fell so quickly into the realm of irrelevance? While there are many factors that one could point to to explain the runaway success of Red Bull, for me it fundamentally comes down to the fact that management of Jolt Cola did not understand which business they were in.

Positioned as the “highly-caffeinated cola,” Jolt saw itself as competing in the soft drink category. It was a cola
for people who wanted a little more of a rush. That meant going head-to-head against behemoths like Coke
and Pepsi.

Its bet was that the brand could siphon off enough iconoclastic Coke and Pepsi drinkers to create its own space within the soft drink category. Its uniqueness never proved to be enough to carve out a niche in the über-competitive, shelf-space stingy, price-sensitive soft drink category. Though it grew a limited yet loyal following in some markets, primarily such social “misfits” as of nascent hackers, computer programmers, gamers and bike messengers, Jolt could never make meaningful inroads into the mainstream. They were always just another cola alternative.

Red Bull, on the other hand, created a category.

Everything about the product screamed, “we’re different,” from the cranberry red appearance to the funky taste to the signature small-sized metallic cans. Seeing someone carrying around a Red Bull can was like the first time you saw someone with those tell-tale white iPod earphones. “What is that?” you can’t help but ask.

Another key marketing difference is that Red Bull didn’t restrict itself to appealing to a limited audience. In the words of Norbert Krailhamer, Red Bull’s Director of Group Marketing and Sales, “(We) did not define a specific demographic segment as (our) target market; we have only people who are mentally fatigued, physically fatigued, or both.”

It takes a lot of guts and a lot of resources to venture out and create your own category. Red Bull recognized there was a quantifiable market for “a drink that gives you a boost.” As such it did not need to compete with The Big Boys of the beverage category.

Bottom line, Jolt was late to come to the realization that there was a mainstream market for energy drinks, and by the time it had dawned on them, people were programmed to see them as a soft drink. Red Bull, on the other hand, was never seen as a “soft drink.”

So this word of caution: Just because you’re first, doesn’t mean you’ll be #1.

Posted by Mickey