114 - Ahmet Mercan, AlphaTauri (Red Bull)

Ahmet Mercan: We do have ambitious goals and already achieved a lot, no questions, but we're always at the beginning. This is what I'm telling to my team because otherwise, we would say, " Okay, we achieved at least something and then we want to keep that momentum." No, it's, " Keep on challenging and pushing the boundaries," and every single day, we do have to challenge the status quo again and always see things through the lens of innovation because innovation doesn't stop, and at the end, to strive to optimize what is and what will be.

Speaker 2: Explore the minds and marketing strategies behind today's winning brands and businesses. Tap into the power of the creator economy with Earned by CreatorIQ. Here's Connor Begley.

Connor Begley: Hi, everyone. Welcome to Earned. We've got Ahmet on the show today. Welcome to the show, Ahmet.

Ahmet Mercan: Hi.

Connor Begley: Ahmet is the CEO of AlphaTauri, the brand that many of you will know, and I am hugely excited about having him on the show today. So excited to get to it.

Ahmet Mercan: Thank you Connor. Me too.

Connor Begley: So one of the things that I think is not as well known, or maybe not everybody knows it is what I should say, is that AlphaTauri is actually owned by Red Bull, is a premium fashion brand for Red Bull. Most people know it from obviously the F1 races, but it is a very well- known fashion brand as well. So I'm curious, most people when they think of an energy drink, they don't associate it with being a high- end apparel label. How does Red Bull balance and find synergies across what are very different types of businesses?

Ahmet Mercan: It's a good question. To be honest, speaking on behalf of AlphaTauri, AlphaTauri is a game changing fashion enterprise founded by Red Bull, and I guess as a brand extension into the work of premium fashion, AlphaTauri shares the same mindset with his mastership, and I guess being driven by innovation, push the boundaries and redefine what is possible and constantly strive to be the best performance makes us unique. I guess this is more or less what we are claiming also for ourself, and at the end, I guess where we are all proud of is that AlphaTauri combines contemporary design with cutting edge textile innovations and technologies. And we are talking always about technology and innovation and we are pushing the industry standards and I guess as an integral part of the Red Bull family, this brings definitely also a lot of advantages. And we want to inspire athletes and fashion enthusiasts and this is also how we are moving on on that path.

Connor Begley: Yeah, I think the technology element and the being on the cutting edge is obviously an angle that I think Red Bull pushes very aggressively, both in sponsoring athletes and in a variety of other enterprises. So what's really interesting for me when I look at your background is you actually joined Red Bull in 2014 and then became the CEO of AlphaTauri in 2015 when the brand launched, so I'm assuming you had a big hand in that. And what's most interesting for me is I actually think that most apparel brands fail. Most don't make it to any considerable success, so I'm curious from your perspective, what has it been like to watch the brand grow over this last seven to eight years? And then why do you think it has been successful when so many other apparel brands have generally not gotten to the same level of success?

Ahmet Mercan: Having the chance to build up a new fashion brand in the context of this environment is definitely an amazing opportunity. I'm always calling it as a once in a lifetime opportunity, and honestly, when we are looking from that angle, that we are a beverage brand or a lifestyle brand and we want to enter into a market of apparel or fashion, and with the fact that no one was waiting for a new fashion brand out in the market and we were starting with a blank sheet of paper on a seat. It was the idea. Out of the idea, the vision was more or less established or further developed, and then we put the strategy together to bring the people in. And of course, on the one hand side, several synergies with our mothership that we could definitely benefit from because it's a brand like no other in the world of lifestyle and the whole environment we are claiming for ourself. And then the other hand, we have the industry boundaries of lead times and development and ideas and the calendars of all these, let's call it difficult exercises of the structures of the fashion industry or the apparel industry. And it was totally different to what the beverage business is doing, and therefore, it was also not the easiest way to find the balance. And we started in 2020 with 20 premium retailers in two countries, and today only three years later, we are talking about more than 200 retailers in up to 20 countries. And we want to further establish the brands with a strong network of the retail partners, and it helps of course to be belonging to Red Bull and to take the advantages and the synergies we have also together with our mothership. And we do have ambitious goals and already achieved a lot, no questions, but we're always at the beginning. This is what I'm telling to my team because otherwise, we would say, " Okay, we achieved at least something and then we want to keep that momentum." No, it's, " Keep on challenging and pushing the boundaries," and every single day, we do have to challenge the status quo again and I always see things through the lens of innovation because innovation doesn't stop, and then this is at the end to strive to optimize what is and what will be.

Connor Begley: And I think that if you were to look at any of the really notable long- term luxury brands, these things are built over many, many decades. They're not built over a few years or a few quarters. And so really, thinking of it from that lens and saying, " We're just getting started. Yes, we're seven, eight years in, but actually, we're trying to think about the next 50 years and what that plays out," is ultimately I think very important to being successful as a luxury brand.

Ahmet Mercan: I guess this is also the biggest challenge we are facing because all the competition area we are facing towards are all established, and even the youngest ones are 20 or 30 years established. And this is not an excuse, but often, it takes time, and we want to elevate a lot of things and accelerate pretty fast, but we have of course also opportunities what other brands doesn't have in the past and this is something we want to take advantage of. But again, we are just at the beginning and this is the overall exercise we have ahead of us.

Connor Begley: Yeah. So one of the other things that I think is most interesting about your brand is obviously F1 and it's association with F1, and F1 over the last several years I think has gone through fairly unprecedented growth, particularly in the US market because of Netflix and social media with Red Bull racing really being at the center of that and you guys being part of that group. So I'm curious, how has that impacted the brand, the growth of AlphaTauri? How have you been able to leverage that generally? And then I think separately, are there any challenges associated with that? Because I can imagine when they think of you guys, maybe they think of the F1 team before they think of the fashion brand first, so talk me through that.

Ahmet Mercan: First of all, it's a huge advantage to have an opportunity or two like that, and especially with that fact, what you mentioned so far that the whole F1 community was getting more popularity and getting more excited in the last couple of years was definitely helping the whole exercise. But it was back in the days the idea of the owner, that he was saying, " Okay, we want to push the brand," especially with the brand awareness we can generate through that playground with the branding of the second team of the Red Bull family. And we started our engagement back in the days in motor sports in February 2020, and it was funny because on the 14th of February 2020, we had a massive and a huge car reveal activation with more than 850 guests, with huge broadcasting, with an immense show. Two weeks later, COVID came up and we had inaudible. It was not the easiest time to launch a brand because especially the whole Formula One was struggling at that stage because no one had a clue, because you are ready to start and then you are in a car reveal momentum, and then four weeks later when you are planning to fly to Australia to have the first race, you got the information, no races anymore for the next couple of months. And it was really, really challenging, especially the stores were all shut down and so on. It was the worst timing to start with a brand honestly speaking. But even out of that, we took advantages, and yes, back in the days, we had this car reveal, but this was followed by the first Grand Prix was held at the Red Bull ring in Spielberg, in Salzburg in Austria. And we had a fashion moment there or fashion at the races was the first activation we did, but honestly, it was these ghost races, no spectators at all. But we had the opportunity because we find a slot close to the racetrack where we had with a lot of restrictions a small get together with 50 guests, all tested. The first time that the people were tested to come together and celebrate that momentum that the cars were. We were in a lucky situation because it was the first sports happening in the whole world during the COVID time. But nevertheless, I guess what is important to mention is that we want to always try to get a link to fashion with Formula One, because this was also the disadvantage out of a partnership with F1 or with an F1 team is that when you don't have a brand equity existing or a brand awareness, not equity, brand awareness existing of a fashion brand, you will struggle with the situation that the people doesn't know what you are, and you were the namesake of a team. It was Scuderia AlphaTauri. And then the people say, "Oh, okay. It's another Formula One team, and when they have fashion or apparel, this is just the spinoff of the merchandising." No, it is totally the opposite. And therefore, it was also our intention to put that into a direction where there is a fashion relevance, and I guess it was the first race what we had in Spielberg back in the days in 2020. But subsequent, we were with AlphaTauri attending at the US lounge at the new car reveal in 2023 where we were in the official schedule of the New York Fashion Week. And we had a car reveal at the Lincoln Center in New York with an amazing show with a lot of guests where we were attending with a car reveal during a fashion week in the official calendar, and this was out of my perspective one of the peaks we can achieve. And yeah, finally, at the very first time of the Las Vegas Grand Prix this year, we bring all the dots together and we created an exclusive capsule collection which we designed in a collaboration with a US artist, with Brendan Monroe. And it was not that he was designing delivery of the car, which was at the end driving the whole circuit. It was also that he was inspiration and designing the apparel we had so far. It was his artwork we extended to that. That means that we bring that together. That a fan or someone who was attracted out of that collaboration, that he can also check out something and get this piece. And I guess this is the ultima of what we can achieve out of that, and this was more or less the whole journey we had. And so all these activations and collaborations in the last three years helped a lot to build the breadth awareness of AlphaTauri all over the world, and the whole motor sport world does have amazing momentums and I guess to be part of it was good. But from next season onwards, we will be the official partner of the FIA, of the official regulatory. This is also something where we are stepping forward because we have to keep the balances how we want to move on also with the perception of is that a Formula One brand or is that a fashion brand? No, we are a fashion brand and we are using these kinds of platforms to create also brand awareness, and we built up a lot of things in the last three years and we want to continue on that journey.

Connor Begley: That makes sense. It's certainly a challenge. Again, the success is great, it's raised the awareness of the name itself, but to your point, I don't think you want to be seen as just gear for the racing team, like a spinoff of that. Yeah, it's a very unique situation that I don't think most people find themselves in, where your brand awareness gets raised but it's for something that maybe isn't necessarily exactly what you sell or what the purpose of the brand was. So a happy accident in some ways. Not accident, but-

Ahmet Mercan: It is a value what is created that you should take an advantage out of it.

Connor Begley: Yeah, a hundred percent. So I'm curious, for you prior to being at AlphaTauri, you had historically been at brands that were not quite as high price point, right? So the price points were a bit lower at Puma and Lacoste. Still luxury brands but a little bit down. What is different about marketing a luxury brand? Because a lot of the people that listen to this are going to be CMOs, CEOs, other people within the marketing space around this category. What do you think is different about marketing a luxury brand with very high- end individual clientele than more of a mid- market brand?

Ahmet Mercan: For me, it was definitely also interesting to see the similarities. I guess it doesn't matter on which price point it is, the importance of building a brand as such is at the end a customer-centric approach and what is important for the customer. And I guess it doesn't matter which price point it is. At the end, the customer is in the middle and an argument based on price is less convincing here because customers buy into the brand and the related association with it, and as well as emotions and connecting with the brand. Back in the days, in my history and my heritage, I had this also with Puma where a lot of sports enthusiastic people were coming in. Lacoste was definitely also a brand where more fashion and sports related people were looking into, and we on AlphaTauri are trying to establish the branch on a much more higher price point because we are putting also a lot of value into that product. And this is also not that I mean that other products doesn't have value in it, but it is not only the value of the brand. It's also the value of the product, the fabrics, the yarns, all the technology we are putting into that. Everyone can claim innovation for themselves but what means innovation and what means technology? I guess there are not so many fashion brands or apparel brands out in the market that are claiming technology for them, and technology is always a phrase what tech companies, car companies, whatever companies are claiming for themselves., But in an apparel or fashion environment, you not really often heard the phrase of technology included or whatever. And we're therefore trying to create also these products, all sorts of demand of customers, and customers are not so informed about what an apparel piece can do. Therefore, it is also important how you can't put so much innovation, technology and all this value in a product and have a lower price point. And this is in a way where you are putting a price point in, and if I'm comparing our products, yes, of course they are more expensive than the brands we mentioned before, but if you compare that value, the input we are putting in every item, then it's definitely also on the lower level instead of what the competitive area is asking for their products. And this is something where we want to also attract also to customers with an attractive product, with an attractive price point as well.

Connor Begley: Yeah. I think that made to fit technology is really interesting for me as I looked into it. I know that's something that you guys have invested in pretty aggressively. Can you talk a little bit, one, just how that works? What are you guys doing that's different? And then two, obviously as technology becomes more ubiquitous, as the ability to create things that fit me perfectly become more accessible, how do you think that space evolves over time, and are there any specific challenges associated with doing that kind of made to fit approach?

Ahmet Mercan: I guess I have to repeat what I said at the beginning. There was no need for a new fashion brand out in the market. I guess this was more or less how we stepped into that because it's oversaturated. There are a lot of brands and very good ones as well, and out of that reason, you have to create the USP, especially when you're coming as an industry outside from somewhere because you have to create the credibility as well because you are belonging to a strong powerful brand. It's a beverage brand, and then you are coming and saying, " Hey, we want to challenge the fashion industry." And then everyone's saying, " Okay, what is your credibility on that?" And therefore, you need a USP and a clear USP and the benefit. And our objective at AlphaTauri is to deliver price with a real benefit to we're above and beyond looking good, because this is the first trigger, that we are not sacrificing the beauty of the product. Because as soon as people are buying or purchasing products, they want to have beautiful products, and this is the first trigger for a fashion item, because the people want to buy it because they love it, because it looks good. And therefore, our exercise was more or less to fuse the functional items, the innovative items with all the elements without exercising the beauty. And this makes the whole exercise much more difficult for us as a brand, especially for the creators, for the designers, for the developers and for all these people. Because you have limitations, limitations in colors, in fabrics, in yarns and all these things because this is really limited. Unfortunately, it was... Not unfortunately, but back in the days, 5, 6, 7 years ago, it was much more limited. Luckily, lots of things are changing at the moment because the demand is also increasing, and therefore, we are taking the brain work onto the product and saying, " Okay, this has done something unexpected," and this is the whole exercise what the whole team is doing, that everyone is trying to put added value in products, and ideally with own technologies where we are creating our own technologies like Taurobran. This is an innovative solution what we created together with sheller textiles who is one of the industry leaders, or this whole 3D knit technology. And with the garments and with the seamless execution, it's not new, but we created in a new way how we are taking advantage out of the tools and the capabilities and the methodologies of the apparel industry and trying to create a complete new product out of it. And this is more or less we are concentrating on outerwear where we are very strong, the whole knit, 3D knit we call it. We have key competencies on AlphaTauri and we want to strengthen that, and this is something where we are looking into that whole exercise and this is also how we are claiming something. And then once it translated also to a certain product, and I guess when we look into the assortment, when we look into the collection, when we look what is at the end hanging in the showroom, then we are saying, " Okay, this product is reflecting the vision what we are promising." And this is not the easiest exercise, honestly speaking, with all the limitations what I explained before. And of course with the boundaries that you have out in the market, even people, they don't care about all these advantages, but the younger generation, the upcoming generation is definitely questioning much more than people like we are doing for example, and this is something that gives me confidence.

Connor Begley: Yeah. These things still need to be done the way they have been done. The other thing that this does that I think is important, outside of, okay, it creates a great product and people like it, et cetera, is I think that it creates a perception of the brand. You go, " Oh, this is a brand that is more technology forward. This is a brand that is pushing the boundaries." I think sometimes, people forget that, even if something is both difficult and maybe not 100% of the business. So I think the last thing I want to hit is in some ways where you mirror F1 was I think that you started being a European based company and that's where you built out your initial market. You've launched in the US this year, and I'm sure that, again, going back to Netflix as well as social media success that's been connected to Netflix, that has helped from an expansion perspective. Were there any particular challenges in terms of expanding into the US market that were unexpected, and do you want the US market to be your largest market? What do you expect, in terms of size or percent, the US to be for you guys over time?

Ahmet Mercan: What is important to mention at the beginning is that the US market is a very challenging market. It's an important market but it's a challenging market, and we're currently working on strengthening our network in the markets. And looking back to the fantastic start we had early this year with the car reveal and of course with Nordstrom, because we are more than happy that we have Nordstrom in our retail portfolio and we were distributed in the most important stores of them and this is something where we are really as a team really proud of. And then in the course of the first Vegas Grand Prix, we had the successful launch together in an exclusive environment with Nordstrom, with the capsule I mentioned before and this was exclusively distributed with Nordstrom, and we could already win first accounts for the US. And we see a lot of synergies between the retailers and the Red Bull organization in the US and we build up a great promising setup. And honestly, yeah, you mentioned that it will be the strongest. I guess it's in the nature of the things that as soon as you're successful in the US, then it's becoming pretty fast one of your biggest markets. But it's unfortunately too early to give you already numbers yet or something like that, but honestly, I would be happy to have the US market as one of our strongest markets.

Connor Begley: Yeah, it's definitely, like you said, saturated. There's a lot of brands. It's hard to stand out. I think the retailers, in some ways it's funny because we talk a lot about social media influencers, these kinds of things, and I think that direct to consumer marketing obviously became very popular, particularly during COVID, but retail distribution is very underrated. It's a huge lever, and whether it's Nordstrom or otherwise, excited to watch.

Ahmet Mercan: What I would like to add maybe on that as soon as I have conversations even with people and especially buyers or partners and they are all customers at the end as well, it is interesting how you can attract these people with a purposeful product and with a purposeful brand, and we are a purposeful brand. And I get a lot of positive vibes and the people say, " Hey, this is amazing. This is exactly what the market is looking for," and this is something what gives me confidence, that there are out in the market much more people existing instead of what we are maybe expecting currently. Because these people want to have something special, and this is also what we are facing when we are looking to other industry. Look at what happened in the car industry with the e- mobility or looking with certain other ones. I want to avoid to mention disruption because it's not a disruption anymore, but it is an adding of something or changing the whole environment. And this is something what I face, especially honestly, when I have the conversation, we are pretty strong in this kind of conversation if we are looking into Asia, when we are looking into Japan or far east, and of course in Europe, you have also in these major mature markets. But it is interesting, especially when I was a couple of times and pretty often this year in the US, and every time when I meet people, it was interesting to get the thoughts of these people on that reflection of the brand, and it was amazing. It was amazing because it was all positive, and this shows me that in the US, we're also ready for AlphaTauri.

Connor Begley: Yeah, a hundred percent. It is interesting to watch that kind of pathway from cool, interesting European fashion brand, that pipeline to APAC, the pipeline to China. Is that a big market for you guys as well that you're focusing on?

Ahmet Mercan: Honestly, all these markets are relevant for us, but again, we are always coming to that early conversation we had, that time, always time, and this is inaudible. We could conquer the whole world simultaneously, but honestly, we have to focus on. And this, honestly, especially when we are talking about the US, it's a giant. It has the whole complexity of the whole of Europe, either the whole world or US, because this is the complexity. And therefore, we have to be really focused on that, how we are stepping forward. I would love to be much faster, but we are still fast. Honestly, we are pretty fast, but step by step. We have a lot of things to do ahead of us.

Connor Begley: Yeah. Focus is critical. We haven't really focused on APAC yet. We need to, but again, we still have a lot to chew in terms of where we are right now. Well, Ahmet, I really appreciate you coming on and taking the time. Congratulations on all the success over the last seven or eight years. I think it's crazy that I didn't even think about the fact that you partnered with F1 right at the beginning of the pandemic, which was a whole nother issue. So I appreciate you sharing and I know I learned a lot and I'm sure others will too, so thank you.

Ahmet Mercan: Thank you, Connor. It was a pleasure.

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