In Focus: Red Bull
13 June 2019
Author: Rachel Boagey
When you think of Red Bull what are the first things that come to mind? Hyperactivity, adrenaline. wings? Rachel Boagey talks to procurement manager David Oliver.
The global giant famous for selling the world's most popular energy drink sure knows how to do marketing, with its advertising campaigns having made it one of the most talked about brands in the world.
Red Bull is an Austrian company but recently acquired space for its new London headquarters in the heart of the city. After finding a suitable spot to talk after roaming the building trying not to interrupt the various Pilates classes and ping pong tournaments taking place, David Oliver, Red Bull's procurement manager, tells me "the space had to reflect the brand - and the brand is so much more than a can of energy drink."
The business has quite a distinctive ethos, which includes investing in and supporting staff, bringing people together and supporting charities, which Oliver explains is represented by walking into its London office.
Forget stairs, there are slides - yes, slides, - to move from one floor to another, and games tables to help the employees to socialise and have fun at work, and Oliver says the company is constantly working on enhancing and improving the space to cater for what its employees want.
Eight years into his role at the company, Oliver joined having had fleet experience in other organisations, and says he took on board what Red Bull was doing regarding procurement at the time and has tried to improve it as best he can. In his words, this includes improving the working environment for his employees and attracting the right talent into the business.
"I have become quite immersed in it, and work closely with our employees and handle everything on the fleet procurement side myself. I know that in a number of organisations now there is not the requirement for a full-time fleet manager, but if you get fleet wrong or hand it to someone who is not really that into it there are risks involved, right the way from duty of care risks to HMRC risks. So I handle everything basically; from insurance to vehicle selection, it is all under my remit."
A staple of the brand is, of course, its 'gives you wings' advertising and Oliver explains that the liveried Mini fleet that you may have seen driving around the UK is just one of the many marketing strategies used by the brand to ensure its popularity.
"We are a private company with a HQ in Austria who have a fairly light touch on what we do here in the UK," he says. "While they may have global agreements with certain brands, other than a few things such as the Wings Mini fleet that we run, there are certain things we do that we get professional organisations to assist us with, but the strategic direction and vehicle procurement we like to very much keep in-house."
There are many reasons for this decision, but one of the main ones, Oliver explains, is to maintain the company ideologies.
"It is not exactly a drain on time or resources, and you foster good relationships, which are good for innovation, rather than relying on what someone else believes your organisation wants," he says.
In his role, Oliver says that understanding the whole-life costs of his fleet is vital, rather than just picking on various elements of fleet management.
"Understanding that interdependencies between accident frequency, damage costs, high fuel costs, and taking the category as a whole and applying those procurement principles to it is so important," he says. "Certain decisions shouldn't be taken in isolation because of the knock on effect it might have and it is only when you manage the whole category you understand how to correctly manage it, I believe."
In the UK Red Bull has quite a lot of home-based workers in sales and marketing roles, and Oliver explains basically all of those will get a company car, around 150 vehicles. Then the balance is a mixture of the Wings Mini fleet, which is around 37 vehicles with a true pool of 42 including spares, and on top of that it has a few converted event vehicles, which are Land Rover Defenders.
"They don't really look like Land Rovers as they have been modified substantially, and have video screens and DJ decks in them, which help to run events," he says. "They are quite crazy-looking bits of kit and one of them looks a bit like a riot van. When one of them turns up at a university campus with a DJ mixing inside they go down very well, often with the Wings fleet there sampling products."
The Red Bull fleet has quite a young driver profile, and most of the new starters will have never had a company car before and are in their first full-time employment role, having had come off the company's graduate scheme.
"I could be getting on for twice the age of most of the people here, but that is okay when you are a business support - you are allowed to be old," he chuckles. "I then have to bore them with BIK tax and explain to them what the company car provides them with.
"It is so important because of our demographic of driver for me to make sure I look out for them to ensure they are getting a great car with great value, despite what the government is currently trying to do with tax," he explains. "We often have to hold the hand of our drivers and make sure they are aware of their responsibilities and obligations, but we try to fit the culture of the organisation too and don't sit there making them read a 12-page document that they have to sign or anything like that. We tend to apply a lighter touch unless it has a significant safety impact or something more fundamental."
Within the fleet the mileage stays quite low, as Oliver explains.
"We don't have a lot of drivers whose job it is to power up and down motorways and do 20,000 miles a year, although for a number of sales guys the car is an essential tool," he says.
Oliver explains that the cars are spread across the UK covering different territories for different customers, and the customer base is typically from major accounts like Tesco and Sainsbury's, right through to indie bars and clubs.
"That is where we have people on the ground in those areas because they are much more effective if they know their local market.," he says. "Basically, we may have a couple of staff in Birmingham, Glasgow, Aberdeen and any major areas where there are a lot of people, and leisure and industry, where we need to have a presence."
Oliver says that rather than growing, the fleet has probably shrunk marginally over the last few years.
"We have been looking at market forces and also getting a bit of a steer from our HR team in Austria, and have realised that we probably weren't attracting so much talent into a certain sales role as we were only offering company cars, not company car allowance," he says.
For that reason, the company is now offering a car or a car allowance, and Oliver says a few people are opting to take that.
"Again, this is probably driven by the way the BIK tax has changed over the last four years," he says. "Many of the potential employees are asking if we do a car allowance so we have enhanced the offering for them, although they can't just drive anything and we will give them a bunch of money. We have a criteria to make sure the car is fit for purpose, new and complies with NCAP safety and other requirements.
"We could probably win these guys back if we can give them an electric vehicle (EV) in the next two years with a 300-mile range, which I think we will be able to do. Then their tax would be 10% of what it used to be and therefore they won't want to use an allowance to buy a vehicle. We don't think they are gone forever," he adds.
Oliver explains that a big concern he has (and probably many other companies have) at the moment is the lack of help from central government.
"It is astonishing that if I do give someone a company car today, I have to say to them 'look you have got this car for four years, but I have no idea what tax you are going to be paying in two and I am sorry as it might be a lot more. That can't be but it is. It is where we have got to and it is quite concerning and it does affect our ability to be confident in the decisions we need to make."
On that note, Oliver says he is definitely thinking of adopting more of an electric fleet.
"Just before our talk I was meeting with the Energy Savings Trust on this very subject to check assumptions and thoughts, and get their expertise on where things are heading," he says. "I think we are just in that slightly awkward period at the moment where product isn't available, the lead times are ridiculous and we haven't quite got the optimum product either.
"If we can defer or delay a few decisions until next year, I think we will be blessed with some more exciting, cost-effective and relevant product at Red Bull. We are definitely heading that way and we are going to jump in at some point, but we probably won't jump in as early as others, perhaps."
From conversations with manufacturers and what he is reading in various publications, Oliver believes that next year is going to be a real breakthrough year in terms of EVs.
"Lead times might still be an issue but at least there will be product that is cost neutral and cost positive on a whole life basis, and it won't require really deep pockets to get involved in this - it will just be the right thing to do," he muses.
He says that, being in central London, he is always conscious of air quality being an issue for his fleet and that corporate responsibility for air quality is at the front of his mind now.
"Brexit was all everyone has been talking about for a long time but now climate is bumping it out a bit," he says. "The information is publically available and my MD could be travelling home on the tube and pick up the Evening Standard and see a report from the Mayor of London on air quality, and will then translate that into 'I am hearing diesels aren't good for fleet anymore'."
Oliver says he has to be aware and conscious that his fleet strategy fits from an environmental perspective.
"We are serious about that, and we do understand and care about that, and there are some financial benefits of doing the right thing in terms of avoiding certain costs, one being a congestion charge," he says. "Notions surrounding air quality, and the positive and negative effects of our fleet activities in our office vehicles, are firmly at the forefront now. The fact we don't sell our product in plastic is great - it is the most recyclable product as it is aluminium, so we know we are doing well on the product front, but it is all the things that support that and fleet's obviously one of those."
Red Bull has made the decision to purchase its vehicles outright and doesn't lease them, but Oliver says that a decision to be made by him now, with the changing environment, is what if the vehicle he purchases next is on his books for four years, which could mean he regrets purchasing it down the line.
"I might regret what seems like a great purchase because of things I just don't know yet," he confirms. "We might start looking at a mini lease kind of arrangement, a hybrid of lease and daily rental. That way we could delight our employees by getting them out of the old vehicles, hopefully reducing their tax, but also getting them ready to move when the market moves, as I believe it will between April 2020 and April 2021."
"We don't want to be stuck and have people realising through their colleagues that we have provided the wrong vehicle, even if today it is the right vehicle. We have to remain sceptical and aware of these things."
This is even more relevant to Red Bull as its new generation of young employees are growing up challenging these things more, says Oliver.
"In some organisations you might have a couple of people who would be enthusiastic about climate change or advocates of it, but nearly everyone that comes here comments on things like if we were to use plastic straws at an event, so we want to be fully aware of that too."
Oliver believes that the trends his fleet will start seeing soon are mobility as a service as opposed to mobility on demand.
"Companies are going to need to open their thinking as they are going to get people come through their door and say 'can I just question why you are giving me a company car as I can step out of this office and with two taps of a phone get a vehicle to take me somewhere and I don't have to worry about parking or congestion?'"
While of course things are different in the centre of London compared with some other places in the UK, Oliver says he is realising that true mobility is something people are gearing up for; it might not be owning and running a fleet, but having access to different options of travel.
"I manage business travel as part of my remit as well, so I can see a whole picture from where I sit as to how much we spend on trains and planes, and who drives and who doesn't drive, and we understand our journeys too. We can't think of it in silos anymore. Once we get that pure mobility then I can see us reducing the fleet," he remarks.
"We need to acknowledge that that's where the arrows are pointing," he says. "I am supportive of the time when the private car will not be welcome in London as we can't carry on as we are. The roads are still clogged up even though people are paying £25 a day to sit in traffic and then there is the problem of permits for people who live here - and ultimately, it just starts to make no sense."