Bang Accuses Some Distribs of “Lost Focus,” Dissuades Taking on Competing Brands
A month ago, we warned that A-B distributors may need to brace for the loss of Bang Energy [see BBD 03-12-2020]. Now, some Red wholesalers are telling us they’re getting what looks to be a “pre termination letter.” (Note, BBD has confirmed that at least some beer distributors have not received the letter.)
BACKGROUND. Recall news came in last month that PepsiCo would acquire Rockstar Energy Beverages for $3.85 billion, thus opening up the door for PepsiCo to strike distribution deals with other energy beverages. Prior to the acquisition, the two held an exclusive agreement, which prohibited PepsiCo from doing anything in the energy space outside of Rockstar. Is Bang next?
THE CLIFF’S NOTES: Back to the letter at hand: BBD has learned through nefarious back channels that Bang parent Vital Pharmaceuticals (VPX) just sent an April 8 notice to select wholesalers, accusing them of “lost focus” against selling efforts, which the producer deems deficient since at least “the fourth quarter of 2019.” It asks recipient wholesalers to assure the company, over the next week, that they will not take on competing brands — specifically, C4.
We excerpt the letter mostly in full:
It has come to VPX’s attention that your team has lost focus on the distribution of our portfolio of products, has failed to adequately support the portfolio, and has experienced significant performance issues. These deficiencies date back at least to the fourth quarter of 2019.
Furthermore, it has been brought to our attention that certain distributors in our network are exploring opportunities to represent competitive energy drinks, including the C4 portfolio of products. Our concerns, if not addressed, will cause us to consider revisions to, or the termination of, the distributor relationship.
Within seven days of your receipt of this notice, we respectfully ask that you provide reasonable assurances, via reply written notice, that your representatives have not pursued or entered into an appointment to distribute C4 or any other brands in the energy drink space.
Separately, in the coming weeks and months, we will continue to monitor your performance and suggest corrective measures. In light of COVID-19 restrictions on travel, this process will begin with a telephone conference to review our expectations. We will contact you to make more particular arrangements. Thank you for your anticipated cooperation.
The letter, which was sent to several — but again, not all — Bang distributors has many scratching their heads. One distributor, who has Bang in two different markets, said he got a letter in one market where Bang was way up, but didn’t get it in another market with weaker trends.
The letters seem to be a prelude to termination with cause. “Why not just terminate and pay the modest termination fee?” one distributor asks in exasperation. “Why risk lengthy and expensive lawsuits that he’ll likely lose?”
By “he” this distributor means Bang’s CEO, Jack Owoc. “Harry, just check out his Instagram, and that’s all you need to know.”
Another distributor says, “the C4 thing doesn’t make any sense ….. Why them?” Is this a prelude to a buyout from PepsiCo, now that they are free to add on more energy drinks after acquiring RockStar?
We do note that distribs have said that Bang’s explosive growth has dropped off lately.
Harry, Jenn and Jordan
“Walking is man’s best medicine.”
———- Sell Day Calendar ———-
Today’s Sell Day: 7
Sell days this month: 22
Sell days this month last year: 22
This month ends on a: Thurs.
This month last year ended on a: Tues.
YTD sell days Over/Under: +1