Progress of Red Bull (2)
The official start of Red Bull was last year, together with the start of the special arcade machine of Tetris. Back in December the total monthly production capacity was around 5000 liter per hour, which amounted to 20000 cans, 250 milliliter per can. This amounted to a total monthly production capacity of 10 million cans at a price of 1,29 $, with a profit margin of 10% per can.
At the current production capacity Red Bull would be able to earn roughly 1 million $ per month, if their inventory was sold completely. Bear in mind, the 10% profit margin already included the total production cost of Red Bull and the very large marketing costs.
This sounded like a lot, but without increasing the production capacity Red Bull would be able to sell a total of 120 million cans per year with a profit of roughly 12 million dollars. Of course, they would be able to increase their marketing resources a lot by investing a large portion of their revenue.
But compared to the Red Bull of 2023 the current company was simply a small workshop.
A total of 12,138 billion cans of Red Bull were sold worldwide in 2023, representing an increase of 4.8% against a very successful 2022. Group turnover was up 9% from EUR 9,684 billion to EUR 10,554 billion. Their expected profit margin lies at roughly 10% per can, amounting to nearly 1 billion $ in profit.
The most valuable Austrian company in June 2023 was Red Bull with a brand value of around 18.4 billion euros. The market value would therefore be around 20 times their yearly profit. Going by this logic the Red Bull company created by Simon could only be worth around 48 million dollars without improving their production capacity.
While thinking about the starting point of Red Bull last year and comparing it to the giant company Red Bull of his previous life, he felt a little sad for a while, but even more encouraged to improve. In 2023 Red Bull was managed to sell a huge number of cans, even with many market rivals. The untapped market of Energy Drinks is simply enormous right now.
Red Bull only needs to cultivate and enclose the market step by step. The financing incoming in the next few months will help to improve the speed of this development and reduce the resistance towards energy drinks due to the help of some Wall Street giants.
Arriving at the largest conference room of the current Red Bull headquarters Simon was very curious how much Red Bull improved under the leadership of his older sister in the last three months. The current strength of the company would decide how many chips for negotiations they would have on the table when talking to the financial institutions and future shareholders of Red Bull.
The whole management team was attending the meeting and Caroline was present as the CEO of the company.
At first the situation was kind of awkward as Caroline wasn't used to reporting the company's situation in such a formal matter and in front of outsiders to her own little brother. But Simon's serious expression and formal way of asking questions, soon turned her into formal working mode.
Overall, Red Bull developed a little better under the leadership of his sister, than Simon initially expected. She chose not only to employ talents and former junior students of Oxford but poached a few high level and senior talents from beverage giants in the industry. This helped the young and upcoming company a lot and shortened the necessary mistakes they would have to learn from.
She used the investment of Simon, an additional 20 million euros, to further increase the production equipment and overall production plant in New Jersey by six times. This way she would be able to increase the production capacity to 120.000.000 cans per month, which Red Bull could potentially produce. Right now, the real production per month is around 40.000.000 cans per month, simply because the market doesn't need more energy drinks for the moment. But the upward trend is clearly visible.
With the further increase of channels of Atari, Red Bull is following the entry into the European and Asian market. Europe is accepting Red Bull very fast, especially markets like West Germany, France, and Britain. Caroline and her team are expecting a surge of demand from Europe in the next few months and to further consolidate the American market.
This would allow them to approximately sell at most 90.000.000 cans of Red Bull per month at the time the negotiations for financing would start. This sales volume per month would account to roughly 10% of the sales volume Red Bull achieved in his prime in 2023, reached within half a year of the founding.
Such a huge sales volume sounds like a lot, but Simon took into consideration that he was facing a completely untapped market without a single opponent right now, and they were profiting from bundling their energy drinks with Atari. This turned Red Bull into the first and only beverage only supposed to be for gamers, a huge selling factor for this group.
If the goal of 90 million cans per month could be reached by May or July the market value of Red Bull would rise by a huge amount, to roughly 160-200 million US dollars, maybe even more, as the growth curve and potential was clearly visible. This would cause huge competition between the investment banks on Wall Street.
Simon's new founded company proved to be a unicorn again and while not being able to invest in Atari for now, they would never resist the temptation of investing into a beverage company. This industry was loved by Wall Street elites because the risk of investment was very low in general, and you could expect reasonable and steady profits for a long time. Every portfolio needed stocks like this to reduce risk and keep the confidence of the market and the investors.
When Caroline and her team finished the presentation of their achievements in the last three months, she was already excited to hear about Simon's thoughts and his valuation. The results gave her confidence, but her younger brother could always find creative new ideas or problems nobody could think of before.
_____________________________
Please leave a Review!