PepsiCo just announced an exclusive agreement to distribute Bang Energy in the US. The deal, effective immediately, comes as PepsiCo also has closed the $3.85 billion acquisition of Rockstar Energy. Terms of the agreement with Bang owner VPX Pharmaceuticals were not disclosed. The alliance gives PepsiCo access to a brand that has surpassed Rockstar as the third largest energy drink, and to a performance energy category that has attracted new competitors including C4 and Keurig Dr Pepper-distributed Adrenaline Shoc. Bang gets access to PepsiCo’s vast DSD network in the US, which will increase competitive pressure on Coke-distributed Monster Energy.
In a statement to be released today, VPX CEO Jack Owoc said Bang and PepsiCo will be a “meteoric partnership” and that Bang has “invented the future by reinventing the game.” PepsiCo Beverages North America CEO Kirk Tanner credited Bang with “pioneering the performance energy segment,” adding, “This alliance plays a central role in PepsiCo’s overall energy-beverage strategy and enables us to significantly accelerate the distribution of Bang Energy to meet rising consumer demand.”
Bang’s core ready-to-drink product, sold in colorful 16-oz cans, touts ingredients such as “super creatine” and amino acids, along with a sugar-free formula that uses a blend of sucralose and acesulfame potassium. Attention grabbing flavors include Rainbow Unicorn, Blue Razz and Candy Apple Crisp. Owoc, who helps formulate the brand from a lab at his Weston, Florida headquarters, has built the brand largely through Instagram channels that have amassed at least 1.4 million followers. Rockstar currently has 1 million Instagram followers.
The courtship between Bang and PepsiCo executives has lasted since at least mid-2019. As BD reported last month, PepsiCo executives met with Bang executives in Florida in early March, in the run-up to the Rockstar deal, according to sources. There was at least one other previous in-person meeting in Florida last year to discuss the deal with Bang's Owoc.
Performance. During the past two years, Bang has grown into the third largest energy drink brand in the US behind Monster, distributed by Coca-Cola, and Red Bull. At the end of the first quarter, Bang’s portfolio had about a 7.7 dollar share of the US energy category. Monster’s full portfolio of energy-related beverages held a 38 dollar share of the category, with Monster Energy and sugar-free Monster Ultra together accounting for a 22 share. Monster’s Reign performance drink, a sugar-free product created to compete directly with Bang, held about a 3.0 share. Red Bull’s energy portfolio held a 33 share of the category.
COVID-19 Slowdown. More recently, Bang’s share of the US energy drink market appears to have declined during the COVID-19 crisis. Bang held a 6.6 dollar share of the market in the week ended April 4, compared to a 7.2 share for the previous four weeks, according to Nielsen data cited by Morgan Stanley.
Warning Letter. In early April, during the runup to today’s PepsiCo distribution deal, Bang sent a letter to some distributors warning them about volume declines. “Our concerns, if not addressed, will cause us to consider revisions to, or the termination of, the distributor relationship,” read the letter, which was signed by EVP of Sales Gene Bukovi and copied to Owoc. As reported by BD in March, the majority of Bang’s nearly 350 distributors are beer houses, primarily from the AB InBev network, which lost Monster Energy to Coca-Cola several years ago. Bang and PepsiCo now will need to unwind those distribution agreements with beer distributors. Bang’s own direct store delivery operation handles 13.8% of the company’s total volume, according to a knowledgeable source at Bang. Evercore ISI analysts have pegged Bang’s AB InBev US distribution at about 250 wholesale houses, covering roughly 70% of Bang’s volume. Bang also has distribution agreements with 22 independent Pepsi bottlers and one unit of PBNA, the Bang source has told BD.
© 2022 Beverage Digest.
Design, CMS, Hosting & Web Development :: ePublishing