Admiral Beverage claimed that it is being improperly forced by PepsiCo to forfeit rights to be the exclusive producer of Rockstar Energy drinks, along with the shareholders and subsidiaries of Admiral Beverage Corporation. The companies filed a lawsuit against PepsiCo in the Wyoming District Court on Monday.
PepsiCo asked its bottlers in April to sign an E-Commerce agreement that would end exclusivity agreements and allow Pepsi to sell products to online retailers directly, according to the complaint. The agreement takes away the bottlers’ ability to set prices for online sales.
Admiral Beverage said it has had an Exclusive Bottling Appointments and Exclusive Distribution Agreements (EBAs) with PepsiCo for over 70 years, but PeopsiCo has attempted to “escape its obligations” using economic pressure. “Of paramount importance to Admiral Beverage and all Pepsi-Cola bottlers is the preservation of their exclusivity rights under the EBAs— rights that PepsiCo has historically recognized as the core of its overall business structure,” the complaint stated.
The complaint said PepsiCo is establishing uniform pricing and taking more control of sales as a response to an expansion in market dominance by Coca-Cola. The companies claim PepsiCo has acknowledged that the e-commerce agreement does not align with the EBAs, which for Admiral Beverage lasts through 2023.
“Economic coercion is not the proper mechanism for PepsiCo to revamp its distribution system. To the extent PepsiCo seeks to overhaul its route-to-market system, then it should follow Coca-Cola’s example and either refranchise its North American bottling operations or offer to purchase the Pepsi-Cola bottlers’ exclusivity rights for fair-market value,” the complaint stated.
The complaint asked for PepsiCo to be prevented from continuing to breach the EBA agreement with Admiral Beverage and for compensatory damages for profits and damages that are already lost.
The plaintiffs, represented by Wheeler Trigg O’Donnell, include; Admiral Beverage Corporation, Wyoming Beverages, Inc., Blue Rock Products Co., Fremont Beverages, Inc., General Beverages, Inc., Harrington Bottling Company, Mike D. Dimich Sons, Inc., Missoula Bottling Company, Inc., Park Bottling Company, Western Wyoming Beverages, Inc., Larsen Beverage Co., Inc., Old Faithful Beverage Company of Idaho Falls, Inc., and Birrell Bottling Company, Inc.