In Depth

Pepsi enters energy drink market with $3.85bn Rockstar deal

Pepsi is attempting to diversify by acquiring Rockstar Energy Beverages

Drinks giant PepsiCo has its sights on the growing energy drink market, acquiring Rockstar Energy Beverages for $3.85 billion.

Neither Pepsi nor its main rival Coca-Cola own a major brand in the energy drinks market - although Coke has a stake in Monster. Pepsi’s move for Rockstar could be the first major move in a battle for dominance in the category, as soft drinks companies diversify away from their traditional offerings.

For Rockstar founder Russ Weiner, the deal represents a huge reward for the $50,000 investment he made to launch the company in 2001.

He told Fox Business that the deal with Pepsi “is going to make this a global powerhouse brand, and my legacy will be safe with them.”

The companies have been affiliated for some time. “Pepsi has had a distribution agreement with privately held Rockstar in North America since 2009,” reports CNBC.

Coca-Cola’s similar distribution deal with Monster had prevented them from selling their own energy drinks in the US until last year, but Pepsi’s deal with Rockstar should “enable the company to sidestep any legal tussle like the one that ensnared Coca-Cola,” says The Wall Street journal.

“PepsiCo shares were down 3.8 per cent in pre-market trading on Wednesday,” The Financial Times reports, “slightly worse off than the 3.4 per cent drop for the S&P 500 that was implied by futures as investors continue to grapple with volatility amid the coronavirus outbreak and following Monday’s oil price plunge.”

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