US – Florida-based energy drink manufacturer Bang Energy has terminated its exclusive distribution partnership with PepsiCo barely seven months after the deal took effect.
Bang Energy CEO Jack Owoc cited multiple issues and concerns regarding PepsiCo’s performance as reasons behind the company’s decision to end its exclusive distributor agreement with PepsiCo.
In announcing the end of the partnership signed just seven months ago, Bang’s outspoken CEO did not mince words in his disappointment in the global beverage and snack giant.
“We sincerely expected PepsiCo to execute at an even higher level based on their enormous resources and promises. Unfortunately, we were wrong. PepsiCo, you’re fired,” Jack Owoc said.
In a rejoinder, PepsiCo said it was “disappointed” by Bang owner Vital Pharmaceuticals’ decision, “especially given the rapid success we’ve had in significantly expanding the presence and availability of Bang Energy drinks.”
PepsiCo, which said it remains the exclusive distributor of Bang Energy drinks across the U.S. through October 2023, said it would fulfill its commitment under the deal, “while also defending and enforcing our exclusive rights granted in the agreement.”
While it’s uncertain exactly what led to the abrupt breakup, analysts believe that PepsiCo had its hands full with its US$3.85 billion deal announced in March to buy Rockstar Energy, making it logistically challenging to deliver on the Bang Energy promise,
What Bang means when it stated that it had concerns with PepsiCo’s “performance” is unclear and but it could be possible the energy drink company was upset with PepsiCo devoting, too much time to its Rockstar acquisition.
It may have believed it was not getting the distribution and shelf space it was promised — an allegation denied by PepsiCo.
Despite the reach PepsiCo has, Bang’s statement shows it feels it can do better on its own when the deal officially ends.
Data from Nielsen shows that during the period ending Sept. 5, Bang sales were down 4.3% from the previous 12 weeks and up 17.1% in the prior year.
This poor performance may certainly be a factor that Bang may have also considered in terminating the deal given that in the wider scope, U.S. energy drink sector is one of the strongest performers in the nonalcoholic space.
According to data from Mintel, US energy drink sales are projected to reach the US$19.2 billion mark in 2024.
The breakup between Bang and Pepsico is however, a sigh of relief to Monster Beverage whose Reign Performance Energy drink competes with Bang.
According to Bank of America: “Investor concerns that PEP’s partnership with Bang would lead to greater distribution and source market share from MNST should now largely dissipate.”
Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. SUBSCRIBE HERE