(Bloomberg) -- Red Bull GmbH’s growth slowed last year after a period of rapid expansion, with rising costs and fierce competition in the US drinks market eating into margins.
The energy-drink maker’s pretax profit margin fell to a four-year low in 2023, the first full business year under new leadership after the death of its founder, Dietrich Mateschitz.
Net sales rose 9% to €10.6 billion ($12 billion) but higher costs meant that net income increased just 3.1%, to €1.7 billion, according to annual accounts published to Austria’s corporate registry late Monday.
Sales growth was over 20% in each of the previous two years.
Red Bull is closely held by Mark Mateschitz and the Yoovidhya family in Thailand. It has a no-debt policy, and is notoriously secret about its operations, meaning the Austrian filings are one of the only windows into its business.
The company said it expects revenue and profits to rise further in 2024. Spending on marketing reached almost a quarter of revenue last year, with sponsorship payments to athletes, including British Ironman world champion Lucy Charles-Barclay and Indian cricket star KL Rahul, reaching €1.09 billion.
Competition in the $22 billion US energy-drink market has been heating up with Red Bull and Monster Beverage Corp. losing market share to new entrants, such as Celsius Holdings Inc., even as their sales rise.
Red Bull’s market share in the US fell below 36% in 2023 from more than 39% two years earlier, according to Circana data. Monster took a bigger hit, sliding from above 42% to 35% over the same period.
What Bloomberg Intelligence says:
“Upstarts touting clean ingredients and post-workout recovery have pushed aside full-calorie varieties and are usurping market share from leaders Red Bull and Monster Beverage — with no signs of letting up.”
—Kenneth Shea, BI senior analyst
Red Bull continued to expand its sport investments in 2023, purchasing a majority stake in the BORA-Hansgrohe road cycling team.
Dutch driver Max Verstappen won a third consecutive Formula 1 championship title last year for the team owned by Red Bull. The company also operates soccer teams in Germany, New York and Brazil.
Red Bull has been considering investing in a new NBA basketball franchise in Las Vegas, Bloomberg reported in June.
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