Jumping from one multinational beverage company to its fiercest rival, Rockstar energy drink has signed a distribution agreement with PepsiCo Inc. that will end its deal with The Coca-Cola Company. Both companies hope the deal will give the country’s number-three brand more consistent coverage across the U.S. and increase PepsiCo’s presence in the energy drink category.
PepsiCo spokesman Larry Jabbonsky said the deal, announced Thursday, will more than double PepsiCo’s share of the energy category. He said he expects Rockstar to mesh well with the company’s other key energy offerings: Amp, No Fear and a collection of energy drinks co-marketed with Starbucks.
“We think that Rockstar complements the portfolio if you look at taste preferences and efficacy,” Jabbonsky said.
Another energy drink, Pepsi’s SoBe Adrenaline Rush, will likely be phased out, he said.
The deal, slated to last for 10 years, according to a Rockstar representative, will put the product in Pepsi’s core three distributors: Pepsi Bottling Group, PepsiAmericas and Pepsi Bottling Ventures. Their territories cover nearly 80 percent of the U.S. and Canada. Jabbonsky said discussions with independent Pepsi bottlers are currently under way, but Rockstar will maintain independent distribution in some parts of the country.
Rockstar’s deal with Pepsi follows the October introduction of Monster into the Coca-Cola system. Rockstar had signed a distribution agreement with Coca-Cola Enterprises in 2005, and renegotiated the deal last year as Coke was in negotiations with Monster-parent Hansen Natural. The renewed deal, which extended through the end of 2009, allowed Rockstar to cancel the agreement with 30 days’ notice.
Following that agreement, Rockstar found itself in the precarious position of possibly sharing trucks with its biggest competitor. Both Rockstar and Monster claim to have come up with many of the energy drink category’s strongest innovations, including their now-ubiquitous 16 oz. cans, juice blends and coffee energy drinks.
As a result, the company was known to be actively seeking new deals, speaking with Dr Pepper Snapple Group and Anheuser-Busch’s 9th Street Beverages before reaching a deal with Pepsi.
Both Rockstar and Pepsi expect the switch from CCE to the Pepsi system to occur this spring or summer – possibly in April. Rockstar spokesman Jason May said he expected Pepsi’s involvement to strengthen the brand’s position on the shelves.
Another Rockstar representative said the new deal taught his firm a lesson: beverage firms interested in getting their product into a major beverage company’s distribution systems should deal with that company, not its distributors. Rockstar joined CCE at a time when that distributor actively sought non-Coke brands to expand its portfolio, forcing the parent company’s hand at a time when it was developing its Full Throttle energy drink. The arrangement, according to the representative, left Rockstar working distributor by distributor within the Coke system, and as aresult, he said, the brand suffered from spotty coverage. With PepsiCo handling its bottlers, he expects Rockstar’s coverage to be more consistent.