Big Red Acquires Xyience

Call it a Texas takedown of a middleweight energy brand.

Big Red Ltd., an independent soda company based in Austin, Texas, has acquired Xyience, a zero-calorie energy drink brand best known for its longstanding relationship with the Ultimate Fighting Championship (UFC).

As part of the deal, Xyience, currently based in Las Vegas, will end its partnership with the UFC and focus on a broader demographic of healthy consumers. The financial terms of the deal have not been disclosed.


Gary Smith, the CEO of Big Red, whose prime asset is its long-running, eponymous soda brand, said that Xyience’s national footprint was an important factor in the acquisition.

‘They’ve done a really good job of building out distributors all over the country and retailers all over the country,” he said.

Smith said that he will preserve the brand’s existing distribution partnerships, such as the recently announced deals with Canada Dry New York, Davis Beverage Group and Polar Beverages. The brand also has deep ties with both MillerCoors and Anheuser-Busch distribution companies, such as Hensley Beverage Company in Arizona.

Under Smith, Big Red has gradually acquired a portfolio of brands, including Thomas Kemper Soda and energy water HyDrive, but Xyience is by far the largest brand the company has picked up. The brand had approximately $45 million in sales, according to IRI numbers for the 52-week period ending May 24, 2014, although those figures don’t include vendors like gymnasiums and GNC- and Vitamin Shoppe-type stores, where it has claimed robust growth.

The brand’s position as the leader of an independent chase pack of energy drinks not named Monster, Rockstar or Red Bull was a remarkable turnaround story following years of shaky finances. Under the ownership of the Fertitta brothers, who own Zuffa, the sports promotion company that runs the UFC, Xyience began a gradual ascent led largely by VP of sales Reuben Rios, one of the few holdovers from the brand’s pre-Fertitta ownership, and eventually by John Lennon, a president and veteran of the beer industry brought on in November 2010 to help fill out its distribution footprint.

Under Big Red ownership, that footprint may change. The Dr Pepper Snapple Group (DPSG) has a 15 percent stake in Big Red and handles about 75 percent of the distribution for Big Red and HyDrive. Considering those ties, the deal led to immediate questions about shifting some of the distribution responsibilities for Xyience more heavily into the DPSG system. While Smith said that there are certain territories that could be potential DPSG locations, Big Red won’t abandon any existing distribution partnerships.

“I don’t know,” he said of DPSG distribution for Xyience. “I think it’s a bit premature to have those conversations.”

Big-Red-Logo3-300x297He added that Big Red’s resources and selling system could create significant growth opportunities for Xyience. And even though the brand will end its time as the self-proclaimed “official energy drink of the UFC,” Xyience won’t forget these consumers. Rather, Smith wants the brand to also reach other healthy people, such as Crossfit athletes, Color Run participants, and marathoners, for example.

“I’m just gonna soften it up a little bit,” Smith said. “Make it a little less hardcore than the image that it’s got today.”

Smith said that, for now, Xyience will keep its current headquarters in Las Vegas. He’s already made moves with the staff, but couldn’t comment on specifics, including the future of Lennon, a former executive with Guinness, Beck’s and Pabst Brewing Company.

“I have a lot of respect for John,” Smith said. “I think he’s done a fabulous job at what he was presented. He’s a well respected beer executive. He’s respected by distributors. So, I can only say good things about him.”

The former co-CEO and COO at Red Bull, Smith sits on the American Beverage Association’s board of directors with Ralph D. Crowley, the president and CEO of Polar, and Jeffrey Honickman, the CEO of Pepsi-Cola & National Brand Beverages Ltd., a major bottling and distribution company based in New Jersey. Smith is widely credited, along with Danny Ginsberg, with helping Red Bull through a rapid period of expansion after it moved into the U.S.

The acquisition follows The Coca-Cola Co.’s recent $2.15 billion payout for one-sixth of Monster Energy. While Smith called that deal intriguing, he said that it didn’t influence the Xyience acquisition.

He didn’t share how Big Red plans to shift Xyience’s image, however, he did say that the company will bolster marketing efforts around consumer messaging.

Xyience employees declined to comment on the transaction.

BevNET editor-in-chief Jeffrey Klineman contributed to this story.