Energy drinks are still a growth market, particularly as consumers shift away from sugary sodas and towards lower-calorie drinks. To gain market share, beverage companies are increasingly looking for new categories of drinks. And towards that end, PepsiCo recently acquired Rockstar Energy Beverages for roughly $3.85 billion dollars.
Acquisitions are a common way of entering new markets with new products. But acquisitions can also be problematic. Rockstar and Pepsi have decidedly different looks and branding, as well as different target markets and products. In addition to energy drinks, Rockstar makes sugar-free and low-calorie drinks, plus organic and fruit juice beverages.
The energy drink category is one that continues to grow, including new entrants such as Bang and A-Shock. And of course, Coca-Cola is in the mix with Monster. According to Mintel, energy drink and energy shot sales are approximately $13.5 billion; the market grew nearly 30% between 2013 and 2018.
Now that’s energy!
Group Activities and Discussion Questions:
- Discuss acquisitions as a marketing strategy. When is this effective? When is it not effective?
- Show Rockstar Energy drink Web site: https://rockstarenergy.com/
- Show Pepsi Web site: https://www.pepsi.com/
- Rockstar YouTube channel: https://www.youtube.com/user/RockstarEvents
- Pepsi YouTube channel: https://www.youtube.com/user/Pepsi
- Have students compare the two sites. What are similarities and differences?
- Discuss the risks and challenges that Pepsi might have with the acquisition.
Source: Associated Press; Wall Street Journal; other news sources