More than a year and a half after telling PepsiCo “you’re fired,” Bang CEO Jack Owoc is finally free.
The Florida-based functional beverage maker announced yesterday that it had reached an agreement with PepsiCo to terminate the ill-fated exclusive distribution agreement it agreed to in April 2020, originally scheduled to end in October 2023.
Though the details of the settlement agreement remain confidential, Owoc responded to questions sent by email last night.
“Now that we’re in the transition phase and the relationship between Bang and Pepsi is being strategically wound down, I believe [that] both parties are happy and desire to move in their respective directions,” he wrote.
Where does Bang go from here?
Moving forward, Bang’s immediate concern is to rebuild its national distribution network. Prior to aligning with PepsiCo, the company had been moving product through a patchwork of independent DSD houses, including multiple Anheuser-Busch (AB) suppliers, and Owoc indicated many of the same alcohol distributors that helped Bang generate its billion-dollar momentum in the late 2010s will be back in the mix once again. That outlook, however, is likely to be complicated by the growing class of competitors — C4, Celsius and AB-backed GHOST, to name a few — that has filled many of the gaps Bang left behind in the years since. Having previously pulled out of those distributors to join Pepsi’s system, Bang may not be able to command the same terms or exclusivity as during its white-hot growth streak.
Owoc, however, projected a positive outlook.
“Currently we are assembling what we believe will be the most effective distribution system in America,” Owoc wrote. “Having dealt with the Anheuser-Busch network, Pepsi corporate, Pepsi independents and many others has allowed us to assemble what we feel is a best in class distribution system in all critical demographics in every state. Right now we have existing contracts with roughly 252 distributors that were existing through alcohol distribution, Allied brands, Bang Energy, etc.
“We are continuing to add additional distributors who we believe can help us achieve our short term goal that will allow us to take a 15% market share in the energy drink category, a midterm goal that will allow us to take a 20% share, and then be neck-and-neck with and eventually surpass Red Bull and Monster in the next three to four years.”
Owoc specified that Bang has “roughly 185 contracts” with alcohol distributors, many of whom are already carrying non-Bang VPX products like Redline, Meltdown, Vooz Hydration Sensation and others.
“Superstars like Jack Hilliard and roughly 10% of all Bang sales still have Bang contracts in place that were not transitioned. Furthermore, many distributors like Pure (Beverage Company) et al., from our powerhouse existing network in 2019 (pre-Pepsi) are very eager to get Bang back,” he wrote.
Reflecting on Bang’s experience with Pepsi, Bang’s CEO was diplomatic, expressing gratitude for the opportunity while describing the two entities as “radically different companies with radically different expectations and visions.”
“What Pepsi did or did not do in the past is irrelevant,” Owoc wrote in response to a question about the distributor’s tactics. “I have to give credit where credit is due and I believe Pepsi has done pretty close to $2 billion in retail sales with Bang Energy. Therefore, I’m appreciative of the learning experience and appreciative of all the business that we did with Pepsi and continue to do in the wind down phase.”
“We are both radically different companies with radically different expectations and visions. Significant dynamic tension between an entrepreneurial company like Bang versus a $70 billion corporation will always exist to a degree and be governed by a different set of operating procedures. It has to be expected that the vision and mission are going to be extremely diverse. We intentionally seek to be divergent and highly disruptive in the marketplace, which in some respects may be something the larger corporations are not comfortable with.”
Despite the end of its relationship with Pepsi, Bang is still in search of new business partners: according to Owoc, the company is in the midst of selling a minority share of Bang Energy, with close to 28 investors and strategic partners currently expressing interest.
As he alluded to during his presentation at BevNET Live this month, Owoc’s next play is a different type of product innovation, as he aims to assert Bang’s position as “the foremost social media company in the world” with the launch of a new app next month.
“Collectively we are the most foremost social media company in the world,” Owoc wrote, citing over 16.8 billion views for #BangEnergy on TikTok. “We are set to launch our new social media app called ULTRA Social in just a few days on July 4. This will further revolutionize the old school and antiquated [pre-Web3] social media platforms that exist today. ULTRA was created and engineered with blockchain technology and has metaverse, smart contract, crypto, and NFT capabilities. We intend to take the entire social media world from the antiquated Web2 into the highly sophisticated world of Web3 technology.
He continued, “We’re also going to do it in such a way where you don’t have to really study these different genres. All you have to do to conduct business and manage your social affairs in this rapidly emerging world is simply use our app. It automatically does all this magical technology for you without even having to think about it. We are also offering our own branded metaverse called the UltraVerse.”
What happens with Pepsi?
When Pepsi paid an eye-watering $3.85 billion to acquire Rockstar Energy in March 2020, the strategy was clear. By bringing the brand in-house, Pepsi was free of the 10-year exclusive distribution agreement it made with Rockstar in 2009 and open to make distribution pacts with other brands — enter Bang.
“All disputes involving Vital Pharmaceuticals, Inc. and PepsiCo, Inc. relating to the parties’ 2020 distribution relationship for Bang Energy® have been fully settled and resolved,” the company wrote. “The parties will work together in the transition of the distribution of the Bang-branded beverages on a rolling geographic basis from PepsiCo to new channel partners on or before the end of this year. The parties have agreed that the remaining terms of their settlement are confidential.”
Now that its relationship with VPX is over, the soda and snack giant finds itself in more or less the same position as before. Its fully owned energy brands (Rockstar, MTN DEW) have failed to generate similar traction in the meantime. Rockstar in particular has struggled to produce positive numbers — dollar sales have fallen -12.9% year-over-year through early June, according to Nielsen — despite a slate of innovations, and Pepsi’s application for trademarks to use the brand in hard seltzers and beer signal a different potential future. Meanwhile the Starbucks-branded natural energy line BAYA is still in its early days. Should another acquisition be on the cards, Celsius may be a prime target.
According to Nielsen data for the 52-week period ended on June 4, PepsiCo holds a 5.8% dollar share of the energy category, compared to 7.3% for Bang.