- Bang Energy filed a lawsuit saying PepsiCo "has engaged and continues to engage in gross misconduct" under their energy drink deal, the company said in a Nov. 25 statement. Bang says it legally ended its exclusive distribution deal with PepsiCo on Oct. 23. In the statement about the lawsuit, Bang said the beverage and snack giant "has falsely represented to independent distributors and retailers that PepsiCo is Bang’s exclusive distributor." The statement does not indicate in which court the lawsuit is filed.
- In its lawsuit, Bang claimed "PepsiCo has resorted to intimidation tactics with independent distributors and major retailers like Walmart threatening lawsuits against anyone who fails to purchase Bang Energy exclusively from Pepsi."
- The distribution partnership between Bang and PepsiCo began in April. A PepsiCo spokesperson said the beverage giant's "original statement [from Nov. 17] still stands." In it, PepsiCo said it remained the exclusive distributor of Bang Energy drinks across the U.S. through October 2023. The company said it would fulfill the commitments made as part of the deal, "while also defending and enforcing our exclusive rights granted in the agreement."
As the bitter breakup between Bang and PepsiCo continues to unfold, the energy drink maker is taking things up a notch with some serious accusations. Bang first said last month that it gave PepsiCo notice of termination as its exclusive distributor on Oct. 23, "citing multiple issues and concerns regarding PepsiCo’s performance." Now, it's filing a lawsuit.
In its latest press release, it's uncertain what Bang is asking the courts for, or in which court the lawsuit has been filed. Multiple emails and calls to Bang and its parent Vital Pharmaceuticals by Food Dive during the last week have gone unanswered.
It's possible that since the companies first announced their deal in April, Bang CEO Jack Owoc is upset that his product's market share has declined, even though PepsiCo is just the distributor and is not responsible for how often Bang is purchased. In Nielsen data from Sept. 5, the firm said Bang sales for the prior 52 weeks surged 17.1%, but were down 4.3% in the previous 12 weeks. During the same three-month period, Monster was up 7.7% and Red Bull rose 20.4%.
Nick Johnson, an analyst who covers Rockstar and Monster at Morningstar, said his understanding is PepsiCo has followed through on its distribution agreement, and Bang has gained additional points of sale since the April partnership began.
"It's probably going to be a forced marriage of sorts for the foreseeable future and Pepsi is going to continue to include Bang on its trucks," he said. "To the extent that retailers keep ordering, Pepsi will keep delivering and Bang will kind of remain a part of their energy strategy, though in a much less robust or significant way."
Even before the Bang deal, PepsiCo was digesting its $3.85 billion deal announced in March for Rockstar Energy, a brand it is working to reinvigorate. PepsiCo CEO Ramon Laguarta said Rockstar would accelerate the company's move into more "consumer-centric brands and capitalize on rising demand in the functional beverage space." Before the Rockstar acquisition, PepsiCo used its Mountain Dew platform to brand its energy drinks, such as Kickstart, Game Fuel and AMP.
PepsiCo, in contrast to Bang, has remained largely silent during the last few weeks despite the barrage of criticisms being levied against it by its smaller competitor. In limited comments made public, PepsiCo appears to believe it is complying with its terms of the deal and likely has little to worry about going forward. To be sure, even if the partnership between it and Bang does further deteriorate, the deep-pocketed PepsiCo has less to lose, while at the same time, is positioned to benefit from growth in the energy drinks space with its own portfolio.