This article is from WeChat official account: FMCG (ID: fbc180) , Author: Li Ke, edit: orange, original title: “intimidation Retail Business, deliberately sabotage the market! Pepsi was taken to court by its own “devil’s claw”, title picture from: Visual China
Actually, Pepsi has its own “devil’s claw”, but it didn’t play well.
In the court case
Recently, the functional beverage brand Bang Energy filed a lawsuit in the Florida District Court, alleging that Pepsi-Cola had committed “serious misconduct in the process of distributing its products. (Has engaged and continues to engage in gross misconduct)“, and “repeatedly and intentionally sabotaged (Repeatedly and intentionally sabotaged)” Bang Energy Market.
Bang Energy is a fast-growing functional beverage brand and one of Magic Claw (Monster Beverage) in the young consumer market. Its core product is Bang energy drink containing caffeine. The energy ingredients include coenzyme Q10, BCAA, patented super creatine, etc., with zero sugar and zero calories. Recently Bang Energy also launched a new flavor rich in nine amino acids. Its parent company-Vital Pharmaceuticals, Inc. (VPX) is a leader in functional beverages and has become the overall growth of the North American soft drink market in 2019 One of the biggest contributors.
In the past 3 to 4 years, Bang has experienced rapid growth. According to IRI data, during the 52 weeks ending May 17, 2020, Bang energy drink sales reached 780 million. Despite the overall slowdown in the energy market growth rate, it still reached the highest growth rate of 80.2%, accounting for 6.6% Market share, Second only to Red Bull (Red Bull) and Monster. In 2019, Bang’s growth rate even reached 699%, ranking fifth in the market.
In a statement on the lawsuit, Bang Energy stated that Pepsi-Cola is “intimidating” independent distributors and retailers including Wal-Mart. They should buy Bang Energy exclusively or face lawsuits.
Bang Energy stated that it had issued a notice to Pepsi-Cola to terminate its exclusive distributor in October on the grounds that Pepsi-Cola’s performance since the beginning of the cooperation is worrying. In addition, all retailers and third parties are legally free to purchase directly from Bang Energy and its extensive network of authorized distributors.
Jack Owoc, founder and CEO of Bang Energy, stated that the company “sincerely hoped that PepsiCo based on its huge resources and commitments could execute at a higher level. He was blinded in the transaction between the two parties. Eyes”. He even directly stated angrily on social media, “Bang Energy has immediately terminated the distribution contract with Pepsi, and cognitive errors and fake news cannot change reality.”
The Nielsen data cited by the company shows that although Bang Energy’s sales had increased by 17.1% in the 52 weeks before the announcement, it had fallen by 4.3% in the first 12 weeks. It is worth noting that in the same time period, Magic Claw increased by 7.7%, and Red Bull (Red Bull) rose by 20.4%.
In response, Pepsi-Cola Company also issued a statement on November 17 that it was disappointed to receive the termination notice. “There is no reason for this, especially considering that we have achieved rapid success in expanding the coverage of Bang Energy beverages. By October 2023, PepsiCo will still be the exclusive distributor of Bang Energy beverages in the United States.” PepsiCo responded in response. Said in.
“Wolli” fights
In fact, the distribution cooperation between Bang Energy and Pepsi began in April this year.
At that time, Pepsi began to growTo focus on the energy drink market, complete the acquisition of energy drink manufacturer Rockstar, and announce an exclusive distribution agreement with Bang Energy.
Pepsi-Cola disclosed in this year’s Q2 earnings conference call that the integration and excess of Rockstar energy drinks, and the construction of Bang Energy energy drinks’ distribution channels are nearly complete. Due to the high profit margins of energy drinks, Pepsi has high expectations for the energy drink market. After the integration is completed, Rockstar is expected to have a very large room for growth; in addition, it will expand Bang Energy’s distribution channels and continue to explore Mountain Dew(Mountain Dew) energy drinks Potential is also the company’s strategic focus.
But the reality is that Mountain Dew, which was originally positioned as a functional beverage for “gaming fuel,” nowadays, apart from the news about the launch of the beverage, there is almost no other relevant content on the Internet. If you want to get a brand new brand in this field, you can only rely on Bang Energy or Rockstar.
Some market observers speculate that because Rockstar and Bang Energy are competitors themselves, PepsiCo may not be able to fulfill its commitment to Bang Energy due to the acquisition of Rockstar. After all, the cooperation with the latter is only an agency contract. In addition, although Rockstar is no match for Red Bull and Magic Claw in terms of scale and market share, the brand has long been mature and recognizable. The marketing methods that Rockstar lacks are even more of Pepsi’s expertise.
It can be said that Bang Energy was eliminated in the internal competition of the Pepsi system. On the other hand, Bang Energy’s CEO’s dissatisfaction with Pepsi has a long history-when conflicts arise within the company and his brand has great potential to become a market leader, no CEO would want his brand to become Foil.
Compared with Bang Energy, PepsiCo has remained largely silent in the past few weeks. In limited public comments, Pepsi-Cola insisted that it complied with the terms of the transaction and said it does not have to worry about the next development.
It is certain that the partnership between Pepsi-Cola and Bang Energy is further deteriorating; but no matter how unhappy it is with Bang Energy, Pepsi-Cola is notWilling to give up multiple layouts in functional drinks.
Morningstar(Morningstar), an analyst responsible for Rockstar and Magic Claw Beverage, said Nick Johnson, “In the foreseeable future, this It may be a’forced marriage’-although Bang Energy is considered to be unsound and the CEO is determined to end the partnership, the brand is still part of Pepsi’s energy drink strategy, and Pepsi will continue to sell Bang Energy. “He also pointed out that Bang Energy’s current demands are not clear, and whether the partnership between the two can be sustained remains to be seen.
Conclusion
Looking at PepsiCo and Bang Energy, you will feel that “history is always similar”.
In the functional beverage industry, there are not many examples of beverage giants having disputes with brand owners as distributors. PepsiCo’s biggest competitor, Coca-Cola, has also gone to court for launching its own functional beverage brand Coca-Cola Energy and Magic Claw Beverage.
In 2015, Coca-Cola and Magic Claw Beverage signed a cooperation agreement. Since then, Magic Claw has become the “spokesperson” of Coca-Cola’s functional drinks, and Coca-Cola is fully responsible for Magic Claw’s global sales. However, in 2019, Coca-Cola launched Coca-Cola Energy and quickly went on sale in multiple markets around the world, which is undoubtedly a “side-by-side ball” for Magic Claw.
This finally annoyed Devil’s Claw and filed a lawsuit in the court, requesting Coca-Cola to stop distributing Coca-Cola Energy. However, the court finally ruled that Coca-Cola Energy and Magic Claw will attract two different consumer groups due to different product ingredients and different types of product ingredients; therefore, according to the terms of the contract between Coca-Cola and Magic Claw, Coca-Cola can legally be available worldwide. Sells Coca-Cola Energy, a functional beverage under its own brand.
Interestingly, Coca-Cola and Magic Claw did not continue to entangle. Since then, Coca-Cola has continued to develop its own brand of functional beverage market segments with its “caffeine” positioning, and successfully promoted it to many countries; and Magic Claw continued to maintain rapid growth and category innovation in the field of taurine functional beverages. This “pro son” and “adopted son”The dispute between the two eventually disappeared.
Compared with the situation where Pepsi-Cola’s own brand “fights in the nest”, Coca-Cola is slightly better in its forward-looking layout in the functional beverage market. Next, how PepsiCo handles this partnership with Bang Energy is very important. After all, functional drinks are a step-by-step battlefield. If you miss a little bit, you will lose more than a fraction of the market share.
In China, the competition for functional drinks, whether it is a lawsuit in the face or a market battle in the dark, is a protracted game; not to mention, the wolves are waiting or the “unicorns” are eager to try. It is the reality that cannot be more real now. The curtain is coming to an end in 2020. In 2021, who will be in charge of the ups and downs of the functional beverage market? Maybe it’s the one you didn’t expect at all…
This article is from WeChat official account: FMCG (ID: fbc180) , of: Li Ke, editor: orange < /p>