Traditional rivals PepsiCo, Inc. (PEP) and The Coca-Cola Company (KO) have asomething else to fight over. The New York Times recently reported that PepsiCo will soon replace Coca Cola as the beverage supplier of leading restaurant chain, Buffalo Wild Wings Inc. (BWLD). The paper reported that the deal is expected to be announced today, Thursday, Dec 12.
Buffalo Wild Wings restaurants, which offer bars and up to 40 television sets per outlet, are famous for its bar concept and ‘dine and watch game’ facility.
Per the deal, PepsiCo will supply Pepsi, Mountain Dew and its other beverages to Buffalo Wings restaurants, which are usually thronged by sports enthusiasts, especially young men. Buffalo Wings will also be able to capitalize on PepsiCo’s affiliations with major sports organizations like the National Football League and Major League Baseball. In addition, Buffalo Wings could also benefit from PepsiCo’s relationships with players and entertainers who can make appearance at its restaurants.
In addition, the paper reported that the two companies are also discussing possibilities of combining their varied products. Buffalo Wild Wings’ chicken wings, hamburgers, sandwiches, appetizers and salads could be combined well with PepsiCo’s snacks like Doritos or Ruffles chips or Cheetos snacks.
As regards PepsiCo, the deal gives it an opportunity to boost sales of its carbonated soft drinks, which have been sluggish of late. Changing consumer preferences, increasing health consciousness, rising obesity concerns and growing regulatory pressures have tremendously pressurized the carbonated soft drinks (CSD) category in North America. These category headwinds are thus significantly affecting CSD sales of PepsiCo, Coca Cola and another beverage company, Dr Pepper Snapple Group Inc.(DPS).
PepsiCo has increased marketing investments and is driving package and product innovation to boost its American beverage business. Moreover, the company is looking for structural alternatives to turn around this business.