1. PepsiCo peril – Playing around in the energy periphery?
Pressed by CLSA analyst Caroline Levy in February on energy drink acquisitions given Pepsi’s valuable distribution system and Monster’s status as the fastest-growing CSD on the market, CEO Indra Nooyi categorically ruled out any acquisitions.
“Moutain Dew Kickstart is our version of the energy drink that’s right for the masses, and we distribute other energy drinks” she said, adding that PepsiCo had looked ‘long and hard’ at the energy category before deciding that M&A would not create value for shareholders.
CFO Hugh Johnston then jumped in to flag-up Pepsi’s distribution agreement with Rockstar, adding that Kickstart “plays around the energy space, in a similar way to Starbucks Frappucino and iced coffee and other potential innovations go down that path as well”.
Pepsi’s lack of a ready rival to newly bulked-up Monster beyond Rockstar and AMP (remember that brand? management don’t seem to) is worrying – given Kickstart’s position in a CSD/energy hinterland Monster is also starting to exploit with products like Ultra Zero. Effectively, Nooyi seems to have run up the white flag and decided that it's too costly for Pepsi to mix it in mainstream energy as we traditionally understand it.
2. Coke gives Monster wings, to rattle Red Bull…
Like PepsiCo, Red Bull is no shrinking violet (€5bn+ or $6.7bn+ global sales in 2013) and isn’t going to fold its US tent overnight – but it’s been losing share against Monster in the States over consecutive quarters now, and RBC analysts predicted last week that Monster will soon overtake its rival in terms of US sales.
Bar the Editions launch in March 2013 and this year’s Summer Edition exclusive in 7-Eleven, there’s the nagging sense that the Red Bull has lost its edge – beyond all the sporting tie-ups, there’s not much innovation (in terms of package, liquid or digital marketing) or youth buzz around what, frankly, seems like a brand in need of a refresh, suffering its first middle-aged aches and pains.