Update 1:30 pm ET:

In Bang's termination letter, the company said it "expects" PepsiCo to place purchase orders for a minimum of $125 million per month. In a statement sent to BD, PepsiCo disputed Bang's minimum purchase assertion and addressed the termination letter.

"We were disappointed to receive VPX’s (Vital Pharmaceuticals Inc.) notice of termination without cause, especially given the rapid success we’ve had in significantly expanding the presence and availability of Bang Energy drinks," the statement read. "PepsiCo remains the exclusive distributor of Bang Energy drinks across the U.S. through October, 2023. We will continue to fulfill our obligations under our agreement, which does not include any minimum purchase commitment. Serving our customers remains our top priority, while also defending and enforcing our exclusive rights granted in the agreement."

PERSPECTIVE: A key question raised by Bang's termination is whether Founder and CEO Jack Owoc is maneuvering for a sale of the brand, perhaps to a beer company? Industry observers surmise that PepsiCo and its bottling system will no longer be motivated to invest as heavily in a brand that the system will lose in three years. That means Bang has either "cut off its nose to spite its face," as one industry observer put it, or has what Bang executives believe is a better long-term plan than PepsiCo.

Owoc did not immediately return an email seeking comment.

Published 10:30 am ET:

Bang Energy has cancelled its master distribution deal with PepsiCo without cause, according to a termination letter released by Bang this morning. The decision, which comes almost three years before the agreement is set to end, is effective no later than Oct. 24, 2023, according to the company’s termination letter, dated Oct. 23, 2020.

In a press release, Bang said the termination after about seven months is due to “multiple issues and concerns regarding PepsiCo’s performance since the parties’ distribution partnership began in April 2020.”

“PepsiCo, you’re fired,” Bang Founder and CEO Jack Owoc said in the release, using the catch phrase that outgoing President Donald Trump made famous in his former show The Apprentice.

The termination of a such a high-profile distribution agreement so early in the term is unusual.

Eric Hanson, PepsiCo’s SVP of Energy Integration, said in an interview that PepsiCo is “obviously confused and disappointed Bang chose to go this path.”

“We look at ACV distribution, number of SKUs in stores, total points of distribution, inventory on display, number of displays,” Hanson told BD. “In all of those measurements, we’re exceeding where [Bang] has ever been in the existence of their brand.”

“Their struggle is that it hasn’t translated into sales growth and share growth,” Hanson said. “They look at the pace of growth they had in 2019, which was driven all through distribution gains, and they then just project that this should have happened under us, and if their brand isn’t selling fast enough that’s a fault of distribution and not a fault of anything related to their brand.”

According to a BD review of US multi-outlet data from IRI, Bang’s share of the energy category (including coffee) had been on a steady decline from an 8.2 share in November 2019 to a low of a 6.7 share during the PepsiCo transition. Under PepsiCo, the brand has since increased to a 7.6 share as of Nov. 1.

“Look at the gains that we've made in terms of share,” Hanson said. “Thinking geographically, there's some nuance in their performance and their velocity, but holistically we're seeing gains in the market. Six months into the relationship, we had a lot to continue to offer them. We felt really positive about 2021.”

Hanson declined to detail any specific concessions Bang requested prior to the decision to terminate. He said Bang’s executive team appeared aligned on the decision to terminate. Markets that were a particular focus of Owoc and his team were Florida, Texas and Southern California, where the brand has operated for some time, Hanson said.