Monster Energy Will Devour Bang For $362 Million [Updated]
The energy drink merger is a surprising win for both brands.
Update, July 5, 2023: Monster Energy just might be Bang Energy's executioner and savior, striking a deal in bankruptcy court to buy its smaller competitor for $362 million, the Wall Street Journal reports.
The deal still needs approval from the bankruptcy court and the Federal Trade Commission, which is currently reviewing the acquisition. But if the deal is approved it could actually benefit both brands.
On the one hand, Monster Energy will be acquiring all of Bang's assets after dealing multiple blows to Bang's business via a false advertising lawsuit (described below) and being one of Bang's largest creditors in bankruptcy to begin with.
Without the deal, according to lawyers for the brand in a recent court hearing, Bang Energy would have to shut down operations completely, and around 700 jobs would be lost, reports Bloomberg. Bang is in a position where it must place all its hope on its main competitor; it's unclear whether Monster Energy will keep Bang's branding as a separate entity once the latter is fully acquired by the former. It remains a distinct possibility that Monster will choose to dominate the energy drink industry with its own exclusive branding, rather than wrangle a wider portfolio.
Original post, April 20, 2023: Monster Energy might just live up to its name soon. The brand has made some savage moves against a competitor, Bang Energy, as it struggles to survive. Bang filed for bankruptcy last year and plans to seek a buyer—and Monster Energy, Food Dive reports, is in the best position to pounce.
The two energy drink brands have a contentious history, throughout much of which Monster has had its claws around Bang. For those unfamiliar with the two beverage brands, Bang is the younger of the two, having only been founded in 2012 (Monster has been around since 2002). As recently as 2022, Bang was just behind Monster as one of the leading energy drink brands in the United States. Statista indicates Red Bull earned $6.8 billion in sales in 2022, placing it at the top of the category; Monster followed behind with $4.9 billion in sales, and then came Bang with $1.3 billion.
Then in September 2022, Monster dealt a hard blow to Bang via a false advertising lawsuit, alleging that Bang misled customers about the ingredients and health benefits of its drinks. Specifically, the label "Super Creatine" was used on Bang beverages, despite the product containing no actual creatine. This allowed Bang to "[achieve] its wild success based on widespread deception," as Monster's legal team put it at the time.
Per the lawsuit, Bang advertised its "Super Creatine" as being "20 times more effective at reaching the brain than other forms of creatine," and said its energy drink can "reverse mental retardation" and help cure disorders like Alzheimer's and Parkinson's Disease. None of these claims were proven true, and a jury credited Monster's claim that Bang Energy drinks did not contain any actual creatine. As a result, the jury awarded Monster Energy a whopping $293 million in damages, which included $18 million on claims that Bang interfered with its contracts with retailers for prominent shelf spaces and $3 million on claims that Bang stole trade secrets from former Monster employees it recruited.
In addition to winning the Bang lawsuit, Monster Energy is also one of Bang's largest creditors in bankruptcy and is a co-rights holder to a 5% perpetual royalty/license for use of the brand's trademark. This means that Bang would have trouble transferring control of that trademark to any other acquirer, thus giving Monster even more influence over Bang without even having to purchase the company just yet.
However, all this being said, Monster has made no public announcement or indication that it plans to buy Bang—the elder company just happens to be in the best possible position to do so. If Monster decides not to go for the kill, there are other sharks in the water: Back in August, Bloomberg reported that Keurig Dr Pepper was getting ready to buy Bang's parent company, Vital Pharmaceuticals Inc., for a potential sum of $2 billion to above $3 billion. Those private discussions fell through, yet while there has not been a purchase yet, there's always a chance for one in the future.
With nothing set in stone, Monster has some options available: It can continue to twist the knife or choose to put Bang out of its misery.