Pepsi Kicks Coke Out at Buffalo Wild Wings

Pepsi Corporate Headquarters, Purchase, NY
Source: Wikimedia Commons, Public Domain
Pepsico Inc. (NYSE: PEP) has scored a win over chief rival The Coca-Cola Co. (NYSE: KO), taking the soft drink business at the more than 975 U.S. locations of Buffalo Wild Wings Inc. (NASDAQ: BWLD), according to a report at The New York Times. A formal announcement is expected later Thursday.

In addition to supplying beverages, Pepsico hopes to improve sales in its snacks business to offset lower sales of its beverages as a result of the deal. For its part, Buffalo Wild Wings is expecting to capitalize on the larger company’s relationships with the NFL and Major League Baseball to boost its sports bars. Financial terms of the deal have not been disclosed.

The deal doesn’t have the earmarks of a big win for Pepsico. The company’s market cap of nearly $125 billion dwarfs the $2.7 billion Buffalo Wild Wings market cap. It is a public relations win though, and that counts for something.

Coca-Cola’s 70% share of the fountain beverage business is not threatened by this announcement. The Atlanta-based soft drinks giant still counts McDonald’s Corp. (NYSE: MCD), Burger King Worldwide Inc. (NYSE: BKW), and The Wendy’s Co. (NASDAQ: WEN) among its customers.

Pepsico’s snacks business teamed with Yum! Brands Inc.’s (NYSE: YUM) Taco Bell stores last year to introduce a Doritos-flavored taco shell that has been good seller for the chain. The deal with Buffalo Wild Wings is sure to include the opportunity for more such new products.

Pepsico’s shares are trading down about 1.7% in the noon hour on Thursday at $81.24 in a 52-week range of $67.39 to $87.06.

Buffalo Wild Wings is trading down the same amount at $141.43 in a 52-week range of $69.80 to $152.53.