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To understand Red Bull's premium position in the market, it's important to understand a little about the recent evolution of the beverage industry. As a former consultant to Coke, I'm not going to be able to go into our experiences launching KMX, which we hoped would be a viable competitor to Red Bull, but I can share some of my other stories.First, just as Coke had done in the early years of the 20th century with restaurants, Red Bull spent a number of years building a valuable distribution network before anyone knew there was a demand for energy drinks. I had my first experience with Red Bull in 1992 by way of my fellow employees at OUTSIDE Magazine, a publication that catered to outdoor sports enthusiasts. To me, it was just like the drinks I had seen for years in Asian markets. Steve Marcus, the head of the LA sales office, had put a fridge in his office where he kept his Red Bull, and told me how it was starting to be the drink of choice for street basketball players, surfers, etc...local athletes who we already knew shaped the trends for everyone else. (Steve would know...he and Bill Garrels had helped dozens of activewear startups get going, for example Eric Meyer of Simple Shoes who is sometimes referenced by Matthew Carroll.) And, in the early days, the only places you could find Red Bull were in local convenience stores and homeopathic retailers. Those little refrigerators were a 1x deal that allowed Red Bull to bypass the traditional choke points that govern what beverages are going to be seen by buyers. But more importantly...having their own distribution network meant Red Bull would never have to give in to a distributor and be forced to discount their product. Once retailers (especially grocers) know you're willing to discount, even once, they own you...and you've just begun the slow, inexorable decline to EDLP hell.You might wonder why I mentioned retailers but not bars. The reason is that it took almost a decade before Red Bull and Vodka became a cult phenomenon. (As Caroline Zelonka noted below, bars had been selling plain Red Bull before promoting it as a mixer.) I had my first Vodka Red Bull (VRB) in 1998, just because I always kept a few bottles in my fridge and sometimes you run out of mixers at a party. It was awesome. By this time, I had just completed a holiday promotion for Coke's fountain unit, so we knew that VRB was starting to go big. The on-premise guys (traditional bars) loved it because they could charge so much for the drink, and because Red Bull had started building branded mini-refrigerators, which were just as good as backlit beer signs. The off-premise guys (liquor stores) were not as quick to adopt energy drinks, thinking it was just a fad.Typically, the ideal bar drink should cost about 20% of the actual selling price. So if your cost of ingredients are $0.90, you should be charging $4.75 for the drink. For the drunkards of the time, the mixers all cost approximately the same but the profitability was going to come from premium spirits (Jack Daniels, Tanqueray Gin, etc.) But since it was self-evident that a $3.00 Red Bull was more expensive than a fountain Coke, consumers were willing to spend the same if not more for the Red Bull Vodka than say a Jack and Coke. For bars it was as if Red Bull had figured out how to get the cheapest vodka to sell for the same price as Jack Daniels. This simple proposition caused Red Bull to singlehandedly turn unprofitable bars into gold mines. Consequently, if you were a bar owner, and you saw what Red Bull had done to turn your business around, if someone came to you with a product that was functionally the same but at half the price, you wouldn't make that deal -- because that would directly diminish the VRB value story, i.e. your ability to sell cheap vodka at premium prices. People would routinely pay full freight for a Vodka Red Bull without batting an eye, but a cheaper Monster Vodka required a lot of unnecessary explaining and consequently never quite had the same cachet. (In my view, the combination of the Red Bull phenomenon and the suddenly healthier on-premise distribution channel was key to much of the expansion of spirits brands in the late 1990s and beyond, more specifically the explosion of flavored vodka brands, but that's a post for another day.)So here's the moral to my story: If you have a product that helps other businesses sell to consumers at higher price points, you deserve to enjoy higher margins.

As a long time small business owner, what differences have you experienced from Obama administration and Trump administration? Did your business hurt more, thrive more from one POTUS to the next? In what ways?Presidents take way too much credit for a good economy and seldom admit when their decisions have a detrimental effect.Consumers spend money based on confidence that they can replace that money or out of necessity. Trump was better at giving one subgroup more confidence, Obama other subgroups.Neither had a meaningful impact on real wages outside of temporary emergency stimulus actions.My revenue increased under Trump but that was all forecasted in predictive growth models.I chuckle when politicians bicker over tax rates for small businesses and crushing regulations. They never really adjust much. I have more reguatory hurdles under Trump than Obama but that’s because in my experience regulations only increase and they will get their cut one way or another.Your business model either works or it doesn’t and no president can change that. No policy can alter that. The model can be tweaked to account for anything Washigton does and sometimes that’s good and sometimes bad. It’s never really life altering.There is a caveat though, can you compete against external pressures beyond your control?An example here; I pay more for a case of Bud Light than the grocery stores sell a case at full retail, so my permit for off premise sales is mostly useless. I have to have the permit to cover my 6 but it’s a $300 superfluous add on with the State every year. WaLMart and the grocery chains have national bulk buying power, I don’t. They don’t sell in store, or didn’t until recently when Harris Teeter opened up a beer a wine bar. I guarantee they are paying the bulk package price for product they sell by the drink.Meh.This becomes difficult for a native business competing against a foreign competitor when Washington chooses to protect large importers over domestic producers. All to common.How small is small?I’m not even considered a small business. I’m a micro business. The government defines small as less than 500 employees and that covers a lot of ground.We have a local business that builds a specific type of machine, on site, for manufacturers. They have a global sales network, almost no competition, earn big profits and employ about 350 people worldwide. The only thing small about them is the workforce, which is very well compensated.I don’t know about today, but once, not that long ago, VISA, the card company, only had about 500 employees in total. Would anyone think of that as a small business?Not likely.Maybe those companies see a difference from one President to the next but those businesses are unlikely to say anything out loud.The rest of us, those businesses with less than 50 employees, probably don’t see a huge difference unless you operate in a niche that caters to one particular socioeconomic group in purely disposable income areas.An example there is another local shop that specializes in custom work on old cars. The owner of that store says business is much better under Trump but his clientele is older, white, largely rural and solidly upper middle class. Another guy, in the same line of work who caters to a younger, urban and more African American clientele says it was a little better with Obama. The only difference is really that demographic’s confidence in the economy and their perception of economic opportunity and access. It was basically the same economy.I sell cheeseburgers. Those are always in fashion.

Thanks for the A2A. In my experience in the hospitality industry (Westin Hotels many moons ago) and more recently my experience as a diner, these 5 elements all spring from consistency:✓steadfast adherence to the same principles, course, form, etc.✓agreement, harmony, or compatibility✓uniformity among the parts of a thing, successive results or events✓harmony of conduct or practice with profession✓ReliabilityLet's look at 3 shining examples of consistency that span from fast casual to elegant dining:Union Square Hospitality Group - Over the past 30 years, USHG has created and operated some of New York’s favorite fine dining restaurants, urban barbecue joints, a feel-good jazz club, a roman trattoria and pizzeria, a neighborhood bar, several modern museum restaurants and cafes, an off-premise, restaurant-quality catering company, and even a hospitality learning and training company. We love new ideas and the thrill of a new challenge. But some things stay the same: we bring our commitment to consistent excellence and warm hospitality to every endeavor, plus the energy of a motivated and supported team. Shake Shack was conceived by USHG founder, Danny Meyer.In-N-Out Burger - In-N-Out Burger was founded in 1948 by Harry and Esther Snyder in Baldwin Park, California, and remains privately owned and operated. Under the direction of the Snyder family, the company has opened restaurants throughout California, Nevada, Arizona, Utah and Texas. In-N-Out Burger’s menu has remained the same since 1948, and we have maintained a simple philosophy – serve only the highest quality product, prepare it in a clean and sparkling environment, and serve it in a warm and friendly manner. We have built a reputation for fresh, made-to-order foods prepared and served by friendly, well trained Associates.Hillstone Restaurant Group - The Hillstone Restaurant Group is a privately-held collection of upscale restaurants with 45+ locations in major cities across the country. One of our more well-known operations is Houston's. The uncompromising quality of our food, service, art, and architecture has set the standard in our industry for over three decades.