PepsiCo agreed to acquire Rockstar Energy for USD 3.85 billion

Beverage giant PepsiCo, Inc. has agreed to pay USD 3.85 billion for energy drink manufacturer Rockstar Energy Drinks, the company reported on 11 March 2020. PepsiCo said that this move will help it become more consumer-centered and capitalize on rising demand.

Energy drinks have been a fairly weak field for PepsiCo and its competitor Coca-Cola but both firms have sought to improve their position in the rapidly growing category of beverages. The move also reflects the changing preferences as customers have slowly discouraged themselves from soda to other deals, including coffee, tea-flavored beverages and low-calorie drinks. As the market for energy drinks rises, companies such as PepsiCo, which already had a distribution agreement in North America with Rockstar, are looking to capitalize on the demand.

Ramon Laguarta, Chairman and CEO of PepsiCo, said that this strategic acquisition will allow to leverage PepsiCo's strengths to improve Rockstar's success and unlock the ability to grow in the market with existing brands such as Mountain Dew, as the company strive to be more consumer-centered and capitalize on growing demand in the functional beverage space. Over time, the company intends to capture the fair share of this fast-growing, highly profitable market and create substantial new partnerships in the energy sector.

Russ Weiner, Rockstar's founder, informed that PepsiCo shares the entrepreneurial spirit of the company and will invest much more in growing the brand. He is proud of what they have created and how they have changed the energy space game. He also added that he was excited to take the PepsiCo-Rockstar relationship to the next level.

The deal reflects the trend among large beverage companies such as PepsiCo and Coca-Cola to overhaul their portfolios to change their dependence on the sales of sugary, fizzy beverages and towards choices ranging from tea and coffee to water of both still and sparkling varieties, which cater to health-conscious and millennial customers.

PepsiCo's energy drinks range also includes AMP and Game Fuel by Mountain Dew. Another drink includes Mountain Dew Kickstart, listed under juice beverages. According to a company press release, Coca-Cola's portfolio includes a stake in the energy giant Monster as well as Coca-Cola Energy, which it has started selling in the US in 2020.

As the Wall Street Journal points out, the PepsiCo-Rockstar transaction has not yet closed, but if it does, it will be Pepsi's first major acquisition since it purchased the SodaStream seltzer-maker in 2018.