Gerry’s Insights: Bang Gets Bumped

“Not with a bang but a whimper,” the poet T.S. Eliot wrote in “The Hollow Men.” With the pun intended, that pretty much sums up the end of Bang Energy’s run as an independent company. As I wrote this, a judge had just approved the sale of the assets of its owner, VPX Sports, to its largest creditor – and intense rival – Monster Beverage. A Federal Trade Commission that at least theoretically is more pugnacious these days certainly had ample grounds to question the potential anticompetitive impact of the #1 energy player buying what until recently was the #3, but the agency punted under pressure from Bang attorneys who warned that the company would spiral into liquidation during the weeks it took to make any such determination. What happens from here remains unclear: if the brand doesn’t slide into the bottling system of Monster’s strategic distributor Coca-Cola but rather into the beer houses Monster cultivates for its alcohol entries and its non-energy entries on the non-alcoholic side, it may retain a vestige of its clout as a profit-maker for the distributors outside the soft drink systems who’ve been so crucial to the path of innovation in non-alcoholic beverages. That’s probably a long shot, and in any case, it enters a Monster Beverage portfolio that already is stocked with the purported Bang-killer Reign and a plethora of lower-priced, “fighter” brands. That doesn’t augur well for the continued relevance of Bang.

So in most ways, it’s the end of an era. Or, as I wrote in my newsletter Beverage Business Insights, the end of an error. Really, a decade-long series of errors, from the branding to the overstepping of its now ousted owner and CEO Jack Owoc and his gratuitous taunting of the co-CEOs of Monster. Still, if the whimpering end of the company as an independent player was a fairly predictable outcome of Owoc’s compounded errors, that still doesn’t much soften the sense of loss this event has brought for the brand that inaugurated the performance energy segment and unleashed a broad bout of innovation in a consolidating sector. Certainly, even as the clock ticked in the courtroom, there was no lack of beer wholesalers who thought that, in the right hands, the brand was ripe for resurrection.

So what are some of the errors I’m talking about? For starters, the branding itself was an error. (And not just because the B in Bang had to be quickly changed after Beats headphones marketers cried foul.) Though Owoc brilliantly leveraged his internal media machine to ride the efficacy of its core “super creatine” ingredient for all it was worth, that turned out to be a lie. There is no such thing as super creatine, as Monster’s attorneys showed in their successful lawsuit over the issue, and that case’s outcome helped to send Bang spiraling into bankruptcy protection last fall. That key identifier now has been stripped off the cans and scrubbed from most online communications, though it’s not clear how many Bang users have noticed or would even care at this stage. As another lawsuit funded by Monster showed, VPX erred in another way: in not taking seriously a warning from Bang brand licensor Orange Bang that it was abusing its rights, using brand far beyond the limited channels it had been granted. That yielded another adverse ruling that contributed to the bankruptcy.

Then there is the heightened 300-mg caffeine level ushered in by Bang and much imitated by other players. Was that another error? It’s too early to say on that one, although as of this writing there are ominous signs that this may be resurging as an issue among our guardians of public health, both institutional and self-appointed. By chance, Bang came along just before energy drink leaders were about to be summoned to Capitol Hill to address concerns that their products were causing health issues, particularly among vulnerable groups like kids. The major companies agreed to revamp their marketing codes and assured listening senators they would keep caffeine content to responsible levels. But that was before Bang ignited. As it did, that assurance got harder for them to uphold. By now, most leading brands except Red Bull have incorporated 300 mg products into their energy portfolios. After those hearings a decade ago, Congress ordered FDA to do a deep dive into the dangers of caffeine but the agency couldn’t find anything alarming and the issue subsided. Some in the energy business have warned all along that it could arise again and it is now, this time in a segment with a lot more brands nudging closer to the FDA’s 400 mg recommended daily caffeine limit.

Finally, Owoc definitely erred in his unrestrained personal attacks on his actual and perceived adversaries. Those included his erstwhile distribution partner PepsiCo, whom he publicly “fired,” Trump-style, never mind that his contract didn’t allow him to do that, moving that already strained relationship into its toxic terminal phase. Owoc would have had ample warnings of the risks of that, given a rich history of beverage founders whose intemperate outbursts wore out their welcome at strategic allies. Just as fatally, those targets also included Monster’s co-leaders, Rodney Sacks and Hilton Schlosberg, whom Owoc continually called out on social media. Sacks (a highly successful lawyer before he became an entrepreneur) and Schlosberg were stocked with a formidable corporate arsenal with which to take Owoc to the wall legally, and they dismantled his legal defenses and quasi-defenses brilliantly in the two cases I mentioned earlier. The combined judgments, along with fallout from the unwinding of the Pepsi distribution alliance, put VPX into that financial death spiral that eliminated a true disruptor to the energy segment. Whatever happens to the brand now in the hands of its new, unsympathetic owner, it truly is the end of an era. Sure, Owoc probably had it coming, but among those I talk to, there isn’t much glee in this outcome.

Longtime beverage-watcher Gerry Khermouch is executive editor of Beverage Business Insights, a twice-weekly e-newsletter covering the nonalcoholic beverage sector.