As adult (21+) consumers’ tastes evolve, PepsiCo identified an opportunity to connect with consumers in a new market: alcoholic beverage distribution. We are excited to leverage strong PepsiCo brands via trademark licensing deals to distribute innovative new products that are manufactured and owned by third parties in the alcoholic beverages space. However, alcohol consumption carries its own unique set of risks, so it's important that we adopt responsible practices in the marketing of these products. We support the United Nations’ Sustainable Development Goal (SDG) 3 to ensure healthy lives and promote well-being for all and aim to take action to help ensure alcoholic beverages with our branding are consumed responsibly.
To the World:
American dietary guidelines1 indicate that moderate alcohol intake can be a component of a healthy diet. Responsible marketing and sales of alcoholic beverages helps mitigate potential social harms of alcohol consumption, including impacts to individual health and the safety of the community. We strive to ensure all alcoholic products associated with our brands are marketed towards consumers above the legal drinking ages in regions where the products are sold.
In 2021, PepsiCo took the decision to move into the alcoholic beverage distribution space in select markets within the United States via a trademark licensing deal to a third party.
Due to federal and state regulation of alcohol sales and manufacturing, the alcoholic beverage industry in the U.S. is more complex than the beverages and convenient foods spaces that PepsiCo traditionally occupies. After Prohibition in the United States ended and regulation of alcohol was returned to states, three tiers evolved for the alcoholic beverages market: manufacturer, distributor and retailer. No company may generally occupy more than one tier (i.e., a liquor manufacturer can’t also be a liquor distributor). Separation between these tiers is intended to promote responsible promotion of alcoholic beverages and increase consumer safety.
PepsiCo does not produce any alcoholic beverages within company-owned manufacturing plants. Instead, we license our brands to manufacturers who own the products and formulas and use our logistics expertise and relationships with retailers to distribute the final products. PepsiCo’s distribution arm, Blue Cloud Distribution, Inc., acts as a distributor for the PepsiCo-branded alcoholic beverages manufactured and owned by The Boston Beer Company and FIFCO USA.
Though we do not manufacture the products, we expect the alcoholic beverage manufacturers in this business arrangement to adhere to best marketing practices around alcoholic beverages. This includes but is not limited to differentiating the labels from non-alcoholic versions of the product, clearly articulating the alcoholic content of the beverage and stamping each package with 21+. Blue Cloud Distribution, Inc. maintains strict policies on product placement and merchandising at retail to avoid consumer confusion between alcoholic and non-alcoholic products.
In 2022, The Boston Beer Company, in a business arrangement with PepsiCo, launched Hard Mountain Dew — the first PepsiCo branded alcoholic beverage on the U.S. market. The 5% ABV beverage is distributed in a limited number of U.S. states by Blue Cloud Distribution, Inc. as well as independent distributors in select markets. We continue to work with regulators to obtain licenses to distribute alcoholic beverages in additional states.
Driven by the success of Hard Mountain Dew, Blue Cloud Distribution, Inc. entered business arrangements with brewing company FIFCO USA to distribute Lipton Hard Iced Tea in 2023. The 5% ABV beverage launched in the U.S. with four flavors sold by Blue Cloud Distribution, Inc. to alcohol retailers. We encourage the above manufacturers to continue to innovate with these brands in the alcoholic beverage market.
November 1, 2023