Ahead of Halloween, Keurig Dr Pepper (KDP) is turning to Ghost to expand its presence in the energy drink category.
KDP agreed to a staged acquisition of the company Ghost Energy, the popular energy drink line, with KDP agreeing to purchase Ghost Beverages and Ghost Lifestyle. Initially, KDP will acquire a 60% majority stake in Ghost for around $990 million, with the first stage of the deal expected to close later this year or in early in 2025, subject to customary closing conditions. The company will then acquire the remaining 40% stake in the company in 2028, for a price determined by the brand’s 2027 financial performance.
Why the big bucks? Sales of energy and sports drinks resulted in around $193 billion in revenue globally in 2023, according to Statista Consumer Market Outlook, which estimates the figure will grow to a little over $240 billion by 2027. Grand View Research estimated that the global energy drinks market alone was worth around $73.81 billion in 2023, anticipating continued growth at an annual rate around 7.9% from 2024 through 2030.
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Ghost’s co-founders, Dan Lourenco and Ryan Hughes, will continue to lead the brand, operating under KDP's U.S. refreshment beverages segment. “As we thought about our company's next chapter, KDP's track record of cultivating disruptive brands, similar challenger mindset, and shared vision for the energy category and beyond made it the right home for our brand and team,” Lourenco said in a statement.
KDP announced the news ahead of an earnings call with investors discussing its Q3 earnings report. “This transaction strengthens our position in the attractive energy drink category and accelerates our portfolio evolution towards consumer preferred and growth accretive spaces,” KDP CEO Tim Cofer said in opening remarks addressing the deal, calling Ghost “young, versatile and founder-led,” estimating the brand’s portfolio -- which also includes other beverage categories like hydration drinks, as well as supplements -- at $500 million.
Ghost claims to have quadrupled in size over the course of the last three years, making it one of the fastest-growing brands in the energy drink space. Persistence Market Research recently ranked Ghost third in its “Top 10 Energy Drink Brands in the U.S. Shaping the Beverage Industry” list, behind only Monster Energy and the Pepsi-owned Rockstar brand. Cofer attributed Ghost’s rise to its “unique brand identity, distinctive flavors and packaging, cross-occasion appeal and strong consumer engagement,”
The acquisition comes on the heels of KDP announcing an agreement with Black Rifle Coffee Company to distribute its new Black Rifle Energy drinks nationally last month. It also arrives alongside a similar distribution agreement with another energy drink brand. During the earnings call, Cofer announced the company had just signed an agreement for Bloom, an energy drink line marketed primarily to women, with C4 Energy parent company Nutrabolt, expanding an existing relationship. Back in December of 2022, KDP agreed to pay $863 million for a 30% equity stake in Nutrabolt, in a deal that included a sales and distribution agreement.
The Ghost acquisition expands KDP’s presence in a category in which it is something of a latecomer, compared to competitors like Coca-Cola and PepsiCo.
“Just two years ago, KDP basically had very little, if any, presence in the energy category,” Cofer admitted during the earnings call. “ As a result of today’s announcement, primarily around Ghost, but also around Bloom, we now have a portfolio of four to five material brands in the category that will allow us to establish a multifaceted energy platform.”
In response to an analyst question about the acquisition, Cofer replied, “We have a proven playbook that we have executed with C4 that we believe we can replicate with Ghost.” He also citied other elements KDP brings to the partnership, such as research and development capabilities, “innovation capabilities, marketing strength, our commercial teams," and “price pack architecture,” as well as further “cost synergies” longer-term.