Why it matters
As adult (21+) consumers’ tastes evolve, PepsiCo identified an opportunity to connect with consumers in a new market: alcoholic beverage distribution. We are proud 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. Alcohol consumption carries its own unique set of risks however, 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 will 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 avoid the potential social harms of alcohol consumption, including impacts to individual health and the safety of the community. We strive to make sure that 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 regulation of alcohol sales and manufacturing, the alcoholic beverage industry in the U.S. is more complex than the convenient foods and beverages 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: manufacturing, distribution, and sales. No company may occupy more than one tier (i.e. a brewery can’t sell directly to a liquor store). Separation between these tiers helps promote responsible promotion of alcoholic beverages and increase consumer safety.
PepsiCo does not produce any alcoholic beverages within the walls of our factories. Instead, we license our brands to expert 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.
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 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 very strict policies on product placement to avoid consumer confusion between alcoholic and nonalcoholic products.
In 2022, The Boston Beer Company, in partnership 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. Driven by the success of this product launch, we are encouraging The Boston Beer Company to explore multiple new innovations with existing PepsiCo brands. We are also continuing to work with regulators to distribute alcoholic beverages in additional states.
January 10, 2023