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PepsiCo to acquire Rockstar Energy Drinks in a $ 3.85 Billion deal

PepsiCo to acquire Rockstar Energy Drink

PepsiCo announced this acquisition with Rockstar Energy Beverages to boost its offering in energy drinks category.

United States: Global food and beverage leader PepsiCo has agreed to buy energy drink maker company Rockstar Energy for $ 3.85 billion. The move is expected to give PepsiCo an added advantage in its energy drinks category and an extra competitive edge over its rival Coca-Cola. PepsiCo is trying to strengthen its presence in the fast-expanding beverage category. Energy drinks category is forecast to grow to more than $ 80 billion over the next five years and is currently dominated by Red Bull.

After the announcement of the deal, CEO of PepsiCo said, “As we work to be more consumer-centric and capitalize on rising demand in the functional beverage space, this highly strategic acquisition will enable us to leverage PepsiCo’s capabilities to both accelerate Rockstar’s performance and unlock our ability to expand in the category with existing brands such as Mountain Dew.”

Founder and creator Rockstar said, “We have had a strong partnership with PepsiCo for the last decade, and I’m happy to take that to the next level and join forces as one company. PepsiCo shares our competitive spirit and will invest in growing our brand even further.”

The deal is expected to close in the first half of 2020 and is subject to conditions. PepsiCo already has a distribution deal with Rockstar since 2009. Its own stable of energy drinks is limited to Mountain Dew Kickstart, GameFuel and AMP.

Rockstar was founded by Russ Weiner in 2001 and the company previously had a distribution deal with Coca-Cola in 2005. However, the two companies’ relationship ultimately failed in 2009 and Rockstar teamed up with PepsiCo.

According to TechSci Research, this acquisition will enable PepsiCo to expand its portfolio of energy drinks that already includes Mountain Dew brand’s Kickstart, GameFuel and AMP offerings. The global giant was as looking to expand its presence in the caffeinated beverages market, as longer working hours in the United States were helping to increase demand for these types of beverages. With rising expenditure on energy drinks by consumers, PepsiCo has taken a major step to create a strong grip over the ever-growing caffeinated drinks market.  Rockstar is among one of the famous energy drinks brand and this deal would further enhance PepsiCo’s brand positioning in the global market.

According to recently published report by TechSci Research,India Non-Alcoholic Beverage Market By Product Type (Carbonated Beverage & Non-Carbonated Beverage), By Packaging Type (Bottle, Cans & Others), By Pack Size (Below 250ml, 250ml-1L, Above 1L), By Distribution Channel (Modern Departmental Stores, Traditional Departmental Stores, Convenience Stores, Online & Others), By Region, Competition, Forecast & Opportunities, 2025”, growth of non-alcoholic beverage market in India can be attributed to rising awareness about healthy lifestyle & wellness, rising disposable income and an increasing number of people consuming soft drinks and juices with their meals. Moreover, marketing activities by leading brands, including endorsements by leading film stars, have also been driving non-alcoholic beverage consumption in India. Also, changing tastes and preferences of consumers, and consumer propensity towards consumption of food & beverages has led to the rise in the consumption of non-alcoholic beverages in the country.

According to TechSci Research report, Global Energy Drink Market, By Type (Alcoholic and Non-Alcoholic), By Product (Non-organic, Organic and Natural), By Target Consumer (Teenagers, Adults and Geriatric Population), By Distribution Channel (Direct Selling/Wholesale Vs. Retail Sales), By Company and By Geography, Forecast & Opportunities, 2024”, global energy drink market is projected to reach USD84.72 billion by 2024 by witnessing a CAGR of over 7% in value terms, due to increasing popularity of energy drinks among the younger generation coupled with associated health benefits. Energy drinks contain a variety of ingredients such as caffeine and taurine, which provide instant energy and as a result are a popular choice among younger generation in the country.