- PepsiCo is all set to purchase Rockstar Energy Drinks energy drink manufacturer for $3.85 billion which will see the competition in beverage market intensify.
PepsiCo is all set to purchase Rockstar Energy Drinks energy drink manufacturer for $3.85 billion.
PepsiCo and Coca-Cola have pushed vigorously in their search of customers who have a much larger variety of beverages to choose from than they did many years ago. Both have to compete with smaller seltzer, soda, sparkling juice, and energy product producers that each sell to a customer subset.
Coca-Cola has branched out of its Iconic Coke to carry its sugar drinks consumers who have dramatically given up or cut back. The company said last year that Coca-Cola Zero Sugar had double-digit revenue gains in its most recent quarter.
In the final three months of 2019, coffee and tea revenues-boosted by the company’s 2018 purchase of Costa Coffee-grew by 4 percent.
The acquisition revealed Wednesday extends the range of PepsiCo’s energy drinks, which already includes the Kickstart of Mountain Dew, GameFuel, and AMP.
Rockstar, now sold by PepsiCo, is one of a handful of big energy-drink brands. The company was founded in 2001 by the entrepreneur Russell Weiner when Rockstar was the first energy drink to come in now-ubiquitous 16-ounce bottles.
Since then, the number of energy-drink offerings has exploded and started edging out sodas for in-store coolers in size. The Austrian-based Red Bull GmbH and Monster Beverage dominate the market, which has another company, Bang, as a significant player in addition to Rockstar.
Beyond traditional energy drinks with bright labels and flavors like Killer Black Cherry, Rockstar offers a range of sugar-free and low-calorie energy drinks, as well as an organic variety and other fruit juice drinks.
The expected deal is to close in the first half of the year.
PepsiCo could do more with its Mountain Dew brands, including Kickstart and Game Fuel, by purchasing Rockstar outright, and potentially sell other power-drink brands, the people said. It would also be able to expand Rockstar’s distribution and product offerings.
That should allow the company to sidestep any legal tussle like Coca-Cola’s one that ensnared. PepsiCo’s competitor has held a large interest in Monster Beverage for years. Last year, Coca-Cola won an arbitration dispute allowing it to increase the distribution of its own Coke-branded energy drinks after Monster attempted to block the rollout.
As Mr. Laguarta was asked on his earnings call last month about PepsiCo’s energy-drink strategy, he pointed to progress in a partnership with Starbucks Corp. that allows PepsiCo to sell ready-to-drink coffee drinks and said it plans to do “better work with Rockstar,” without further elaboration.
