Mar 13, 2020
Following the news that PepsiCo is set to buy Rockstar Energy Beverages; Andy Morton, Drinks Deputy Editor at GlobalData, a leading data and analytics company, offers his view:
“This agreement will fill a gaping hole in PepsiCo’s beverage portfolio just as The Coca-Cola Co looked to have the drop over its historic rival in global energy drinks.
“In recent years, Coca-Cola has taken a minority stake in Monster Energy owner Monster Beverage Corp and launched its own energy drink under the Coca-Cola brand. The moves targeted fast growth in energy that has stolen share from carbonated sodas such as Coke and Pepsi and threatened the traditional business strategies of the larger beverage multinationals.
“As Coca-Cola cozied up to Monster, PepsiCo’s lack of action in energy became more apparent. Energy offerings from PepsiCo so far have largely been from its Mountain Dew soft drinks brand, with niche consumers such as gamers served with the likes of Amp Game Fuel and athletes with a caffeinated version of Gatorade called Bolt24.
“The Rockstar acquisition hands PepsiCo an off-the-peg solution to its lack of a bespoke energy brand while offering new angles for those already in its portfolio. According to GlobalData, Rockstar accounts for just 4% of the global energy drinks market by value, but the company offers a platform to bigger things.
“The purchase also sounds the starting gun for a new frontier in PepsiCo and Coca-Cola’s beverage war as the world’s biggest soda companies finally get serious in energy.
“For years, the global energy drinks market was dominated by the upstart Red Bull. Recently, however, Monster – buoyed by a sea of cash from domination in the US – has closed the gap by stretching its tentacles beyond the country, with exports boosted by a distribution agreement with Coca-Cola. With Rockstar now set to join PepsiCo, it too could become a global player and expand beyond its current few dozen export markets.
“There’s much to play for – according to GlobalData, the global energy drinks market grew by 8.9% in 2018, making it the fastest-growing category in non-alcoholic beverages. That growth was driven by Asia (+18.7%), Eastern Europe (+16.9%) and Africa (+14.0%). China, meanwhile, became the world’s biggest energy drinks market after overtaking the US, signaling that the real action in the category lies beyond PepsiCo and Coca-Cola’s developed markets.
“Prepare to be buzzed – the energy drinks showdown is going global”.