Pepsico announced today that Rockstar will be switching to Pepsico as their energy drink distributor, allowing Pepsico’s main bottling operations to distribute their line of energy drinks. Rockstar is still under a distribution agreement with The Coca Cola Company’s bottlers until the end of 2009, but will have the ability to cancel the agreement with 30 days’ notice. This switch comes four months after Monster energy announced they will have The Coca Cola Company’s bottling companies distribute their energy portfolio.
After Monster’s agreement was announced in October 2008, Coca-Cola began distributing Monster energy in mid-January 2009. A similar time frame is expected for Rockstar to transition from Coke’s distribution system over to Pepsi’s. Therefore, it is most likely that Rockstar will be coming off Pepsi bottlers’ trucks in April or May 2009.
Of the top five energy brands, Rockstar currently holds the third-highest market share in terms of volume sold (14.2%), with Monster (29.2), Red Bull (25.2%), Amped (8.6%), and Full Throttle (6.7%) making up the other four market leaders. The Coca-Cola Company owns the Full Throttle energy brand, while Pepsico owns the Amped energy brand.
So how does this affect the business landscape for the major energy drink giants, Red Bull, Coca-Cola and Pepsi? Coca-Cola definitely wins in the short term, as they will distribute three of the top five energy brands for a span of three or four months, owning half of the energy drink market. In the long term when Rockstar will be distributed through Pepsi, Coca-Cola will be in a tougher position to win market share.
At the transition point, Coca-Cola will still lead the market at 36% market share, while Red Bull comes in second at 25%, and Pepsi in third with 23% market share. Red Bull has stepped up their efforts to re-gain lost market share volume by introducing of a new product size. Pepsi has also heavily advertised their Amped energy brand (Dale Earnhardt Jr. Nascar sponsorship, introduced three product extensions). Monster will be releasing a new product (energy shots) soon. Rockstar will be releasing two new flavors and two energy shots soon. However, Coca-Cola has not made any significant marketing efforts to grow their in-house energy brand. Therefore, among the five major players, Full Throttle stands to lose market share while Rockstar is the most likely candidate to gain market share through their product introductions.