The Battle for Energy

PepsiCo (PEP) and Coca Cola Company (KO) dominate the beverage industry, aiming to expand and remain competitive. Through smart acquisitions and deals, they've seized opportunities in the booming energy drink market.

Acquisitions of Competitors

Both PepsiCo and Coca Cola have engaged in strategic acquisitions to enhance their market presence.

• Coca Cola acquired Energy Brands for $4.1 billion and also obtained a minority interest in Monster Brands.
• PepsiCo purchased the Quaker Oats Company for $1.7 billion, which included the renowned Gatorade brand.

Rise of Energy Drinks

Energy drinks have become increasingly popular among athletes and consumers seeking a boost of energy.

• Gatorade, launched in 1965, was a frontrunner in the sports drink category, serving athletes' needs.
• With the advent of energy drinks, both Coca Cola and PepsiCo recognized the importance of entering this market segment.

Cola Wars in the Energy Drink Market

The rivalry between Coca Cola and PepsiCo extends into the energy drink market, with each seeking to gain a competitive advantage.

• Coca Cola's ownership in Monster helped them establish a presence in the energy drink sector.
• This move potentially influenced PepsiCo's consideration of acquiring the Bang energy drink brand, reigniting the historic "cola wars."

Challenges and Setbacks

Despite the ambitions and resources of large buyers, not all acquisitions and business deals lead to success.

• PepsiCo engaged in discussions to acquire Bang Energy, but as more energy beverage companies joined the market, Bang's market share dwindled.
• The buyout discussions came to an end when Bang's parent company, Vita Pharmaceuticals, filed for Chapter 11 bankruptcy.

Entry of Monster Beverage

Monster Beverage, co-owned by Coca Cola, poses a new challenge to PepsiCo and Coca Cola's market shares after a failed deal.

• Monster's potential acquisition of Bang Energy, currently under review by the Federal Trade Commission, holds uncertain prospects.
• If the deal falls through, the consequences could lead to Bang's liquidation and the loss of around 700 jobs.

Current Status and Legal Issues

• Monster Energy won a lawsuit against Bang Energy for false advertising, resulting in a significant payout.
• The lawsuit revealed allegations of deceptive practices, including the absence of claimed ingredients in Bang's beverages.