Refresco Beverages is asking for at least $67 million in damages after accusing former client Congo Brands of backing out of a long-term production agreement for sports drink PRIME, according to a lawsuit filed last week in the Court of Chancery in Delaware.
The complaint – which pits the world’s largest independent beverage bottler against one of the most popular drink brands to emerge in recent years – stems from a 2023 agreement between Refresco and Congo to manufacture sports drink PRIME Hydration, a three-year contract that stipulated for up-front investment in an additional, exclusive production line in Refresco’s Truesdale, Missouri facility for PRIME’s custom shaped and sized bottles.
In exchange, Congo accepted the inclusion of a financial penalty if it failed to purchase and take delivery of at least 90% of agreed annual volumes. Congo agreed to purchase at least 18.5 million 12-pack cases of PRIME Hydration (16.9 oz PET bottles) annually, or 55.5 million cases over the three-year period.
Refresco claims, however, that the deal fell apart before a single bottle came off the new dedicated line. Once the equipment work was completed in March, PRIME allegedly refused to participate in a final test run and failed to submit any orders.
At the time of the agreement, PRIME’s popularity and sales were surging, with rampant demand and the challenge of custom bottles creating additional strain on Congo’s ability to service key markets and compete with the likes of Pepsi (Gatorade) and Coca-Cola (BodyArmor). The Refresco partnership, the complaint alleges, was envisioned as “an important next step” for expanding the brand, and Congo continued to voice its long-term commitment to the deal even as delays in equipment installation pushed the production start date from fall 2023 into spring 2024.
In lieu of pursuing financing to complete the facility upgrades, Refresco implemented the “take-or-pay” provision.
But as PRIME’s sales decelerated, Refresco claims that Congo executives began dragging their feet in March 2024 in providing a “short-medium term forecast” for orders coming off the new Truesdale line; no forecast was ultimately produced. The suit alleges that, after multiple attempts to confirm a forecast, Steve Polce, Congo’s manager for external manufacturing, informed Refresco in an email on March 20 that “the decision was made to not move forward” with the Truesdale deal.
When Refresco responded with a threat to take legal action, Congo allegedly asserted that the agreement had already “terminated under its own terms” on an unspecified earlier date and that the “parties never agreed upon and executed a Master Supply Agreement for production of Congo products at the Truesdale facility.”
The suit represents another hit to PRIME after a couple of prodigious first years on the market. Volumes for the brand’s sports drink have plunged -24.6% in the past 12 weeks, according to data from NielsenIQ, though still up 34.6% for the 52-weeks ended July 13.