Dive Brief:
- Bang Energy will transition from having its beverages distributed by PepsiCo to new direct store delivery partners, the company said in a short statement. Bang did not respond to an email seeking more details, and PepsiCo did not respond to requests for comment.
- Bang CEO Jack Owoc said in the press release “that all disputes with PepsiCo have been fully settled and resolved.”
- The two sides have been at odds since late 2020 as Bang’s owner Vital Pharmaceuticals and PepsiCo, the manufacturer of Rockstar, disagreed over whether the smaller beverage maker could leave a deal reached by the two companies earlier that year.
Dive Insight:
It didn’t take long for the partnership between Bang and PepsiCo to turn contentious and now it appears the bitter feud has come to a harmonious ending.
“Our primary objective is to effectuate a smooth transition that best serves both Bang Energy’s and PepsiCo’s highly valued retail customers,” Owoc said.
Just eight months after the two companies signed their exclusive distribution deal in March 2020, Bang announced it was terminating its exclusive distribution partnership. Bang filed a lawsuit saying PepsiCo “has engaged and continues to engage in gross misconduct” under their energy drink deal. It claimed PepsiCo used “intimidation tactics with independent distributors and major retailers like Walmart threatening lawsuits against anyone who fails to purchase Bang Energy exclusively from Pepsi.”
PepsiCo countered, saying it remained the exclusive distributor of Bang across the U.S. through October 2023. It said it would fulfill its commitment under the deal, “while also defending and enforcing our exclusive rights granted in the agreement.” An emergency arbitrator later ruled in PepsiCo’s favor and said Bang must honor the terms of the deal.
While no details are known about the agreement announced this week, including whether any cash will change hands, the separation will allow Bang to work with its own partners on distribution while PepsiCo can focus on building up its energy drink franchise. It was apparent the deal was in trouble soon after the ink dried, so moving apart seems to be a logical choice with more than a year left in the agreement.
PepsiCo doubled down on the category in 2020 when it purchased Rockstar for $3.85 billion, and a month later signed its deal with Bang. It has since launched Mtn Dew Energy targeted at morning consumers, and it announced in January a ready-to-drink energy beverage called Baya through the North American Coffee Partnership, its nearly 30-year-old joint venture with Starbucks.
The U.S. energy drink sector is one of the strongest performers in the nonalcoholic space. Retail sales of energy drinks rose 9.2% in 2020, according to Mintel, and are projected to reach nearly $20 billion by 2025 — nearly doubling over the past 10 years.
While brands like Monster and Celsius have thrived, just being an energy drink doesn’t guarantee success. Last year, Coca-Cola said it was discontinuing sales of Coca-Cola Energy in North America after a little more than a year in the U.S. market.
Data released by Statista in July of last year showed Bang may be getting left behind, too. Case sales of Bang energy drinks in the U.S. in 2020 totaled 16.4 million compared to 18.3 million just two years earlier.
