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Red Bull faces Energy Drink Market battle in India

Austrian energy drinks maker Red Bull and its erstwhile Indian partner Rahul Narang Group are headed for a long and bitter courtroom battle over territorial rights.

Red Bull, which recently severed its ties with the Indian partner, was stopped last week by a Mumbai court from poaching distributors of the Rahul Narang Group to sell their energy drink.

The Mumbai-based Rahul Narang Group had applied to a local court charging the Austrian multinational of poaching its proprietary distribution network, weeks after ending one of the oldest alliances in the country's beverage market.

Red Bull is growing at 30 percent annually. It is estimated to be a Rs 190 crore brand in India and controls close to 80 percent of the Rs 250-crore energy drinks market. Its rivals include Coca Cola's Burn, Zinga, local brands like Cloud 9 and a clutch of regional brands.

The Bombay City Civil Court agreed and restrained Red Bull from approaching three of RNG's sub-distributors in Pune, Bangalore and Gurgaon, and rejected the Euro 4.2-billion firm's plea seeking permission to move the matter to an arbitration court in Geneva.

But the court asked Red Bull not to approach those three specific sub-distributors and said the Austrian giant was free to negotiate with the remaining 300 distributors and sub-distributors.

"Red Bull is free to go on its own but let them build the operations on their own," Rahul Narang, founder & chairman of RNG, said in an interview.

Rohan Vyavahara, a spokesperson for Red Bull, confirmed that the company has been stepping up efforts to build its own India network.

"The court's outcome has confirmed our legitimate right to continue doing business with partners of our choice throughout India," Vyavehara said in a telephonic interview.

The Rahul Narang Group, meanwhile, is negotiating with Monster, a global energy brands from the United States, to market in India.

Ever since Red Bull set up its base with wholly owned subsidiary Red Bull India Private Limited in 2008, it became clear that the autonomy of the Indian partner would be curbed. Prior to 2008, RNG was importing and selling Red Bull on its own.

Over time, Red Bull put in place its own leadership team to oversee key accounts, ground sales and distribution operations of the Rahul Narang Group. Though logistics and warehousing were partially split, finance and marketing functions came under the direct supervision of the global energy drinks company.

According to The Economic Times, the split happened because RNG failed to meet mutually accepted targets. Two years back, both had agreed to scale up the venture's reach to 25,000 outlets from 15,000; but only 19,000 outlets were tapped. Currently Red Bull reaches to around 21,000 outlets and the company targets to triple that in the next 15 months.

Rahul Narang Group markets and distributes a clutch of international food and beverage brands including Perrier, Evian, Illy Coffee and Lindt Chocolates through its distribution network of over 150,000 points of sale nationwide.

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