BY Richard Summerfield
Vital Pharmaceuticals (VPX) – the manufacturer behind the Bang Energy drinks brand – has filed for Chapter 11 bankruptcy protection in the Southern District of Florida, a move it claimed would allow it to reorganise and regain market share from domestic rivals.
VPX’s restructuring efforts are being supported by $100m of additional financing from the company’s syndicate lenders to help ensure operations continue uninterrupted during the restructuring process.
“We are excited about our future, and particularly the new distribution system that we have spent the better part of this year assembling,” said Jack Owoc, chief executive and founder of VPX. “Utilizing our new state-of-the-art decentralized direct store distribution (DSD) will allow Bang Energy to get back to our pre-Pepsi meteoric annual success of several hundred percent year over year growth.
“The primary objective of our new DSD network is to regain the massive market share we earned prior to Pepsi and continue to achieve double digit growth and progress vigorously beyond 20% market share in energy drinks,” he continued. “Bang Energy’s new DSD network will launch nationwide and be closer to 100% as it officially completes its exit from the Pepsi relationship this month. This will be a comprehensive transition with no impact to product availability.”
VPX has endured a difficult period of late. Recently, the company lost a lawsuit against Monster Beverage Corp. In September, the company was ordered to pay Monster nearly $293m for interfering with its rival’s dealings with retailers and falsely advertising the mental and physical benefits of Bang drinks. The filing brings Monster’s lawsuit against VPX to an immediate halt.
The brand was previously distributed by the carbonated soft drinks (CSD) giant PepsiCo, until a disagreement between the two companies ended with Mr Owoc claiming PepsiCo “engaged in a premeditated plan to destroy Bang from day one”. PepsiCo has since bought into another energy drinks company, Celsius Holdings.
Immediately prior to VPX switching to Pepsi in early 2020, Bang’s share of the energy drink market was roughly 9.7 percent. Under Pepsi’s distribution, roughly 3.4 percent of that market share was lost. At $200m per share point, that equates to $680 million in today’s energy drink market, according to a VPX statement. Bang Energy’s newly orchestrated and soon-to-launch direct DSD network currently covers nearly 95 percent of the US market.
In August, speculation was rife that another CSD company – Keurig Dr Pepper (KDP) – was in talks to buy the VPX, with a deal worth $2-3bn being suggested in the press. Mr Owoc later confirmed no deal was in the pipeline, adding he “would never sell Bang Energy” for that amount.
News: VPX Seeks Chapter 11 Protection as It Transitions to World Class Distribution Network