Energy drink makers have had a hard time lately with the more staid beverage giants. Monster Beverage saw merger talks with Coke fizzle this week and Rockstar may have trouble luring a business bedmate because its marketing partners, which include Playboy, are too controversial. (Masterfile)
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Rockstar Energy Drink’s edgy image has made it the fastest-growing player in the red-hot sector.
It is also scaring off suitors, The Post has learned.
Marketing tie-ups with Playboy, tabs on its website for potential models to apply and scantily clad women at its events have left Rockstar, after a year of looking for someone to hook up with, alone at the altar, according to sources.
“It’s not an image that I would want to be associated with,” a well-placed beverage executive said, when asked if his company was considering buying Las Vegas-based Rockstar.
The numbers are certainly alluring: Eleven-year-old Rockstar is posting the largest US sales gain in the energy-drinks category.
More than a year ago Rockstar hired Goldman Sachs to help it find a buyer.
Both Coca-Cola and PepsiCo passed on a deal because they were uncomfortable with Rockstar’s image, sources close to the situation said.
PepsiCo handles almost all of Rockstar’s US distribution.
Rockstar’s US market share grew 1.7 percentage points last year to 18.7, percent, taking customers from Monster and Red Bull, Beverage Digest said.
The Dr Pepper Snapple Group is weighing a bid for Rockstar, sources said. However, its distribution system is significantly smaller than PepsiCo’s, and moving Rockstar into it would likely result in lost sales, a source said.
The Las Vegas company may not be the only jilted energy drink maker. Corona, Calif.-based Monster Beverage this week appeared close to being acquired by Coke.
In fact, Coca-Cola, which distributes Monster brand drinks, a year ago suspended its share repurchase program so it could make a major acquisition, a source said.
A report this week by wsj.com said the two were in talks. Hours later, Coca-Cola shot down those rumors.
Some observers speculated Coke walked away after word of the talks leaked out, sending Monster’s shares soaring 25 percent.
Michael Bellas, founder of consultant Beverage Marketing Corp., agrees the energy-drink companies’ images have helped keep them single — something they can ill-afford to change given that’s how they’ve successfully built their brands.
“You can’t go too far away from that positioning; [their images] involve a good deal of edginess,” Bellas said.
But brand identification isn’t the only problem.
The top three US energy drink makers are growing so quickly — US volume grew 17 percent last year — they are trading at, or seeking, purchase multiples higher than their beverage kin.
“My gut is until the category slows down none of them will be purchased,” Bellas said.
Still Stifel, Nicolaus analyst Mark Astrachan said in a report this week Coke would find an $85-a-share purchase of Monster a suitable one because of savings it would capture from handling all the US distribution. Now it handles about half the distribution.
Monster, with a $12 billion market capitalization, closed yesterday at $68.67.
PepsiCo and Coca-Cola declined to comment. Dr Pepper and Rockstar did not return calls.