Dietrich Mateschitz Partners with Chaleo Yoovidhya
Dietrich Mateschitz co-founded Red Bull with a Thai businessman named Chaleo Yoovidhya in 1984. From the onset, Dietrich knew that he was facing a bleak future if he failed to convince people that Red Bull would deliver what it promised to do—boost energy. The product itself was very hard to market due to a number of reasons. First is because of its taste, which borders between disgusting and strange. Second, “energy drink” was not considered a profitable business that time because wholesome milk and supplements did the job. People conveniently turned to pills and capsules if they needed an extra fix of energy. There was simply no “energy drinkers” market, to begin with. Finally, Red Bull was priced double than other beverage products. No fool would buy an unknown drink that’s expensive; and even if someone actually, by sheer happenstance, did grab a Red Bull bottle, its taste won’t encourage a second gulp.
The Story Behind Dietrich’s Staggering Wealth
So what did the trick? How come Red Bull burgeoned from a million dollar into a multi-billion dollar investment?
Sometimes it’s not that bad to be different. Staying away from being ordinary certainly has its advantages. Dietrich Mateschitz braved to take the path nobody had ever walked on, leading to his becoming a self-made billionaire. Because of a very successful branding and marketing, he now owns a collection of vintage helicopters housed in his own mammoth of a hangar. While everybody else scoffed and mocked him for zealously believing that Red Bull would be the first product of its kind, Dietrich chose to turn the other cheek and focused on improving his product.
Getting to the peak of success where he is now was not an easy journey. Dietrich had to invest everything he had and rely on his experience and expertise in order to get consumers to patronize his peculiar product. It took him three years to perfect the formula with the help of a Thai pharmaceutical company. He made sure that Red Bull would get the following it deserved by resorting to novel ways of product placing. Dietrich is not the type of person who shies away from challenges. His courage was all he had with all of his savings gone and invested in Red Bull. He could not fail, or else he would lose everything—his money as well as his credibility.
If Dietrich, for once doubted Red Bull’s success, he would have easily lost hope. He knew what and who he was up against, but more than that, he knew himself. Luckily, he had a surplus of guts and creativity. Those and his irresistible charm got him and his company by. After three years of incessant toiling and unprecedented advertising stunts, Red Bull became the first ever energy drink that achieved worldwide recognition and patronage.
The taste was not tampered with and the price only got higher but through it all, Red Bull remained the bestselling energy drink.
Perhaps, it did give people wings—or at least, it gave Dietrich his. Red Bull is now recognized not only as an energy drink brand but more notably, as a major sponsor of racing teams, football teams, soccer teams, a stunt foundation, and death-defying sport events. Its weird taste did nothing to deter Red Bull’s growing market. Surely, it’s not the promise of growing wings that that won us over, but the rare and unequalled dedication of a “salesman” who turned a deaf ear to those who said he cannot be a businessman. We respect the brand because of the amazing story it tells about an Austrian national who started the energy drink era.
Dietrich Before He Became the Wealthiest Austrian
Born in Sankt Marein im Mürztal, Styria, Austria, Dietrich Mateschitz, was from a conservative family of priests and teachers. His mother gave birth to Dietrich on 20 May 1944, while the Second World War was raging on. Both of his parents were primary school teachers. The Mateschitzs are predominantly of Croatian descent. Unfortunately, his parents separated when Dietrich was still very young to remember any of it, let alone understand what caused the family rift.
He was left to the custody of his mother who became one of the first witnesses to Dietrich’s knack for persuading. After completing high school in Styria, Dietrich thought it was time to leave his hometown. He chose Hochschule für Welthandel, now called Vienna University of Economics and Business Administration, not because of its reputation but mainly because of its location.
Dietrich wanted to experience what it’s like to live in the renowned city of Vienna. However, he knew that his mother would not let him go any further than Graz, the city nearest Styria. He had to convince her that he had no future in Graz. In order to get his mother to agree, Dietrich had to concoct a reason that was both realistic and practical. He only had one chance and he needed to pull it off.
Dietrich thought the most plausible way to do it was to look for a program available only in Vienna. Ship Engineering turned out to be the only course not found in any other Austrian universities except Vienna. He took it from there and told his unsuspecting mother: “I had only one desire in life, and that was to become a ship engineer.” What kind of mother would say no to that? Convinced by his acting, his mother supported her son’s “only one desire in life” and happily saw him off aboard the bus that would take him to the place where he believed his dreams await.
Of course he did not register in the Ship Engineering program. How he got away with that is now immaterial as he ended up enrolling in the most fitting course for him—commerce. Coming from a small town, Dietrich was momentarily lured by the distractions of the city. Unlike other success stories, Dietrich’s does not include numerous academic recognitions. On the contrary, he spent 10 years of his life in Hochschule für Welthandel. He began taking his degree in commerce at 18 and completed it at 28.
In order to support his extended college tenure, he had to work part-time as a ski instructor. Most successful people would have had a doctorate degree at the age Dietrich finally completed his undergraduate studies. Apparently then, he had no illusions of becoming a billionaire.
Ten years in college must have taught Dietrich a lot of things about advertising. At least, his overstay in university did not go to waste as he kept himself abreast with new marketing approaches and disciplines. A fresh graduate at 28, Dietrich was just excited to put everything he learned into practice. Unilever must have seen that drive in him and despite his unimpressive college record, they accepted his application.
Being a rank and file employee, however, had not been so fulfilling for Dietrich who wanted to do more marketing–related work. He resigned from Unilever and joined Blendax, a German toothpaste company which was later on purchased by Procter & Gamble.
Because of the opportunity given to him by Blendax, Dietrich spent a good 10 years marketing shampoo and toothpaste products. What he considered to be his “dream job” at the marketing department was at first exciting for the young salesman who was just beginning to prove himself as a very effective sales-talker. Blendax recognized talent when they see one and before long, they assigned Dietrich more assignments that included frequent business trips to their overseas partners.
Traveling with all expenses paid by the company kept Dietrich happy for a while. Blendax, in turn, was more than happy to have him on the team. Ten years passed by and Dietrich was doing pretty much the same thing since he joined his second company. He was 38 and was then beginning to wonder if there was more to life than attending meetings, seeing the same people, meeting the same women, and wearing the same “uniform.” He woke up one day realizing that even traveling did not look as appealing to him as it used to be.
The rush he used to feel going on trips slowly ebbed away as he grew more and more tired of doing routine work. Dietrich was at a crossroad. He was uncertain if he could stand the tedious cycle for another 10 years. Work became a drag and he started searching for a deeper purpose in life.
He was in that frame of mind when duty called him to Thailand. The long flight (almost 11 hours) from Vienna to Bangkok sapped Dietrich of his energy. Ten years of globe-trotting did little to get him accustomed to long trips. He often suffered from a serious case of jet lag whenever he went to Asian countries.
Discovering Krating Daeng
On his way from the airport to the hotel, the Thai cab driver noticed how the long flight enervated him. Seeking to ease his passenger’s discomfort, he recommended that Dietrich try Krating Daeng.
Arriving at his hotel, Dietrich’s exhaustion was getting on his nerves. Headache prevented him from preparing for the series of meetings that brought him to Thailand. In desperation, he asked for a bottle of Krating Daeng from a nearby pharmacy, thinking that braving to sample Thailand’s local “energy drink” was far better than making a fool of himself in his meetings. Dietrich did not yield to his gag reflex when he gulped the syrupy Krating Daeng with both eyes closed.
Lo and behold! His jet lag vanished. It only took a few minutes for him to regain energy and get rid of his jet lag. Krating Daeng worked!
He could not believe that such a potent drink existed. There was nothing like Krating Daeng in Europe. Well, they would have coffee to perk them up in the mornings but a drink to revitalize them was yet to be put out in the market... Market—that lit up a bulb somewhere in Dietrich’s frontal lobe.
If Asia had an energy drink, what should keep him from making it available in Europe? The marketing specialist in him rapidly started drawing up a European energy booster—one that would take care of what coffee cannot handle: jet lag and lack of vitality. He was not particularly taken by the taste and sticky texture of Krating Daeng, so he thought of tweaking the recipe to achieve more of a fizzy consistency. Rather than sticky, his kind of energy drink would be carbonated. If you had been in the marketing industry for as long as Dietrich was at the time, it would not take you a while to figure that all out.
Conceptualizing was only one part of the job—he needed to see it done. Besides, he had a job to do at Blendax—sell toothpaste, that is. Getting sicker of his monotonous career, he longed for a career change. That “change” finally began to fall into place when he went to Hong Kong for yet another Blendax business trip.
Dietrich and Chaleo Yoovidhya Invest in Business
While killing time at the poolside of the Mandarin Hotel, he read that a local businessman selling energy drinks became Japan’s top taxpayer. If that Japanese champ made money by investing in energy drink business, it was about time he carry out his plans before someone beat him to it.
Using his connections in Blendax, he contacted a Thai business associate, Chaleo Yoovidhya. Luckily, Chaleo had affiliations with TCBG Pharmaceuticals—the makers of Krating Daeng. Chaleo took the “energy drink” idea from a Japanese brand called Lipovitan-D. Intimidated by the stiff competition in the city, Chaleo thought of tapping the countryside market and he began to sell Krating Daeng in 1962.
Krating Daeng was peddled by the locals who first gave away free samples to truck drivers and other hard laborers. Soon after, Chaleo’s energy drink saturated the countryside and later on became popular even in Bangkok.
Twenty years had passed before Dietrich heard of Krating Daeng in 1982. Chaleo’s success story beguiled Dietrich and fueled his determination to create his own tonic drink—European style. That’s what he needed Chaleo for. To start his energy drink business, Dietrich would have to shell out a huge amount. For Dietrich who made a living by working at Blendax, $500,000 was all the money he could raise. The $500,000 he invested came from his personal savings. Dietrich was indeed one brave man to put his lifetime savings at risk in a business no one guaranteed would succeed.
Dietrich Agrees to Give Yoovidhya’s Son 2%
Chaleo, a shrewd businessman, saw how bent Dietrich was on creating a European version of Krating Daeng. The Thai businessman was so impressed by Dietrich’s business proposal that he agreed to invest $500,000 to get it going. The two also decided to have an equal share of 49% in the company with the remaining 2% given to Chalerm Yoovidhya, Chaleo’s son.
It was easy for Dietrich to hand in his resignation to the Blendax management. He felt that 10 years was already more than enough of employment experience. He could hardly wait to get his hands dirty setting up his very own company.
The Making of Red Bull
First things first, he needed a brand name. “Krating daeng” translated to English meant “water buffalo.” Dietrich did not have to go too far to draw inspiration in naming his energy drink. “Red Bull” sounded cooler than “Water Buffalo” so he adopted that name. With the help of TCBG Pharmaceuticals, Dietrich customized Red Bull’s taste and consistency by turning the syrup into a carbonated drink. He thought Europeans would prefer it that way.
Now, on to the bigger work: branding and marketing. Those were the two determining factors that set Red Bull apart from Southeast Asia’s tonic drinks. To do that, he enlisted the help of his longtime friend, Johannes Kastner, who owned an ad agency in Frankfurt.
Dietrich and Johannes go a long way back in Vienna University. Dietrich offered his friend a deal: he would do freelance work at his ad agency provided Johannes take care of his packaging and slogan pro bono. Who could not say no to Dietrich?
Johannes was in for a big surprise when Dietrich, his easy–go–lucky buddy, turned out to be one demanding “client.” Just having the packaging layout approved took a year and a half. Clearly, Dietrich was not settling for anything less. He wanted his brand to convey superiority. Dietrich wanted Red Bull to be anything but a plain carbonated drink. What it sucked in taste, it had to make up for in packaging. Oh, and they had a lot of making up to do in the taste department.
After a year and a half of rejecting packaging proposals, Dietrich was finally pleased with their 50th design—a blue and silver emblazoned can with two brawny bulls about to get into a fight under the bright yellow sun. With the packaging taken care of, Johannes and his team faced an even more daunting task. They had to think of a slogan that would capture what Red Bull does.
Persuading the public to drink sweet thirst quenchers was already a big challenge for ad agencies. Red Bull’s cough–syrup taste only added pressure to the ad team. Nevertheless, they kept trying. But Johannes could only take so much beating from Dietrich. Out of desperation, he told his friend to look for another agency that would “do justice” to his energy drink.
To appease Johannes, Dietrich went easy on him and convinced his friend to give it one last try. It rendered the poor Johannes sleepless. He knew that he was getting close to the best slogan for Dietrich’s tonic drink, or at least he better be. At 3:00 in the morning, he suddenly thought of “Gives you wings.” It sounded perfect. He immediately rung Dietrich to pitch the last slogan idea he will ever suggest. Johannes thought that if Dietrich still rejected “Gives you wings,” that would have been the end of their deal.
Much to his delight, Dietrich felt the same way as he did about “Gives you wings.” He accepted the slogan without further ado. Red Bull was at last ready to join the beverage industry. It’s time to introduce it to a non-existent market. How is he going to create the need when the market was so full of beverages of all kinds ranging from fruity to fizzy?
Selling Red Bull
A master marketer, Dietrich had already thought of that. He had three years to study the market carefully. He did it both the traditional and the contemporary way. Studying the market traditionally would involve a marketing surveying firm. He sought a well-known firm’s services which did nothing but paint a very gloomy picture for Red Bull’s future. Bad vibes were the last thing he needed, so he went another route—creative positioning.
Instead of selling Red Bull at a lower price, he opted to double its introductory price. Asked why he did that, he replied in a private interview, “If we'd only had a 15 percent price premium, we'd merely be a premium brand among soft drinks, and not a different category altogether.” We could not really argue because it created the buzz when they began to sell Red Bull in Austria. Chaleo must have been peeved by Dietrich’s audacity. As much as he would have wanted to, the poor little man could not reverse his partner’s decisions because they agreed that Dietrich would be in-charge of everything. It all boiled down to Chaleo merely providing Dietrich his capital.
It was decided that Red Bull would be sold in the market at $2.00 per can—half the price of Coca-Cola and Pepsi products. Rather than focus on the problems he would likely face, the cunning marketing specialist looked for ways to make Red Bull more alluring. Since its main selling point was its ability to boost energy, Dietrich thought it would be best to have athletes endorse Red Bull. He turned to a fellow Austrian for help—10-time winner of Formula 1 race, Gerhard Berger.
Dietrich must have sounded his irresistible self when he met with Gerhard because the next time people saw him at the racetrack, he had a Red Bull bottle in his hand. The trick worked and soon after that every athlete downed a bottle of Red Bull before embarking on life-threatening sports.
Red Bull Makes Dietrich a Man of Wealth
The emergence of the energy drink industry owed its existence to tonics Red Bull, the patron saint of fizzy drinks. Looking back, it was hard to believe how Red Bull earned its following. Dietrich’s $500,000 investment is now valued 1,000,000 times its initial capital following a consistently growing demand.
No matter how enticing the stock market is, Dietrich had no intention of making Red Bull public for one simple reason: “It's not a question of money. It's a question of fun. Not only that, can you imagine me in a shareholders' meeting?”
To those wondering if this mogul has a life outside Red Bull, Dietrich is having fun dating and doing very little socializing. He must have purchased racing, football, and soccer teams among his many prized acquisitions but unlike other Forbes mainstays, Dietrich keeps to himself and is rarely seen watching his teams’ competitions.
Laucala has its Own Yachts and Jet Airport
Apart from owning racing and other athletic teams, he also invests in real estate on a larger scale. Take for example, Laucala Island. It's an exclusive private island developed by Dietrich for the most entitled people alive on Earth. In its website, it promises "the dream of the Garden Eden." It must be saying the truth because according to www.travelworldonline.in, the seven-star resort has 25 villas, five restaurants and bars, a private jet airport, 18-hole championship golf course, 12 horses, yachts and a world-renowned spa.
Dietrich Mentions Plans for Son in an Interview
Apart from the success of Red Bull, it was his son Marc that makes life worth living for Dietrich. He leaves it up to Marc whether or not he would later on decide to continue his legacy saying, "My 19-year-old son will join the company after finishing his studies, if he wants to and if the time is right." He rarely gives interviews, but when he does he always mentions his son and his high hopes for him.
For what it’s worth, Dietrich absolutely did it.
Organisations and Campaigns Supported
- World Stunt Awards
- Red Bull Media House
- Formula 1 Race
- 1984: Co-founded Red Bull
- 1987: Started selling Red Bull in Austria
- 2003: Bought the Laucala Island in Fiji for $10 million
- 2004: Bought former Formula One circuit A1-Ring and renamed it the Red Bull Ring
- 2004: Bought the Jaguar Formula One
- 2005: Bought SV Austria Salzburg football club (Now Red Bull Salzburg)
- 2005: Purchased Minardi Team
- 2006: Bought American football club MetroStars (Now Red Bull New York)
- 2007: Founded the soccer team Red Bull Brasil
- 2007: Launched Red Bull Media House
- 2009: Founded German football club RB Leipzig
- 2010 - 2012: Red Bull Racing won three consecutive Formula 1 Constructors Championship
- 2012: Bought hockey club EHC Munchen (Now Red Bull Munchen)
- Owns Team Red Bull NASCAR Team
- Owns Seitenblicke
- Considered Richest Man in Austria
- Red Bull Media House is considered one of the world's 50 Most Innovative Companies
- Licensed Pilot