Energize

Pepsi buys Rockstar for almost $4B — it's all about the "functional bevs"

Thursday, March 12, 2020 by Snacks

"I might even be a Rockstar"... Hannah Montana said it best, but Pepsi's feeling it — it just bought Rockstar Energy for $3.85B. Russ Weiner founded the canned energy company in '01 (his mom was CFO). Pepsi has distributed Rockstar since '09, but that deal meant it couldn't launch a Mountain Dew-branded energy rival — now that it's acquired Rockstar, its energy ambitions are unlimited. The rest of Big Bev is shifting from sugary sodas too for these reasons...

  • Health: Tea, coffee, kombucha, coconut water, and other lower-cal and more natural bevs have skyrocketed in demand.
  • Energy: Energy drinks and coffee-flavored anything are increasingly splurgeable commodities (because we're all exhausted).

Or combine the 2 for a winning strategy... For years, Big Bev lagged in the exploding health/energy sector. Lately, it has been upping its "functional drink" game:

  • ABInbev's Bud literally launched a hard green tea and hard coconut water brand... this week
  • KeurigDrPepper launched "healthy" energy drink Adrenaline Shoc.
  • Coke owns a 19% stake in Monster, then eventually launched its own energy drink competitor (Coke Energy) despite Monster's complaints.
THE TAKEAWAY

Big Bev needs "functional bev"... Something providing more than just sugar/alcohol. With the Rockstar acquisition, Pepsi immediately gets the #3 spot in energy drinks (after Monster and Red Bull). It can also go big on its Mountain Dew line and do energy in-house. Sodas aren't far from energy drinks (caffeine, sugar, unpronounceable chemicals) — maybe Big Bev just has to throw in vitamins, more caffeine, and more extreme names (Coke Energy is the epitome).

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