PepsiCo and Dr Snapple Swallow Healthy Drinks Companies

23 Nov 2016 --- PepsiCo and Dr Snapple Group have underscored the importance of the consumer demand for healthier drinks by making acquisitions in this area.

PepsiCo is to buy healthy beverage maker KeVita for around $200m, as it looks to further diversify it drinks portfolio.

California-based KeVita makes more than 20 flavors of probiotic drinks, which are certified organic, gluten-free, non-GMO and vegan, and fermented tea beverage kombucha.

Its portfolio of drinks has between five and 45 calories and most of its flavors have no sugar but are sweetened with stevia.

The Walkers crisp and Tropicana-owner bought a minority stake in KeVita, which is sold across more than 20,000 retail outlets in the US, in 2013. 

PepsiCo said KeVita, which has nearly doubled its revenues in the past year to around $60m, will continue to operate as a separate entity and carry on making its drinks in California.

The move will help bolster PepsiCo's high-profile pledge to ensure that two-thirds of its global beverage volume contains 100 calories or fewer from added sugar, per 12-oz serving by 2025.

“Joining the PepsiCo family will give us an opportunity to extend KeVita's trend-forward beverages to a broader audience, while staying committed to our core values,” said Bill Moses, CEO and co-founder of KeVita. 

“We're looking forward to more consumers experiencing the KeVita brand and to leveraging PepsiCo's marketing and distribution capabilities.”

“I am pleased to welcome KeVita into the PepsiCo family. Under the leadership of CEO Bill Moses, KeVita has become an innovative, high–growth brand that is transforming the functional beverage space,” said Chris Lansing, general manager and vice president, PepsiCo Premium Nutrition. 

“This announcement is further evidence of PepsiCo's focus on delivering Performance with Purpose by continuing to evolve our health and wellness offerings to meet consumers' changing needs.”

Separately, Dr Pepper Snapple Group said it is purchasing drinks maker Bai Brands for $1.7bn.

Bai Brands, which counts Justin Timberlake as an investor, promotes its drinks as containing five calories, antioxidants and no artificial sweeteners. 

Bai's drinks span across water, fizzy drinks, coconut water and premium ready-to-drink teas, and its brands includes Bai, Bai Bubbles and Cocofusion.

Dr Pepper Snapple, whose brands include Dr Pepper soda, A&W root beer and Canada Dry ginger sales, said it expects Bai to make around $425m in sales in 2017.

Timberlake said he was a big fan of the drinks and would contribute to making new flavors and advertising campaigns.

“We're excited to welcome Bai into our family of great brands,” said Larry Young, DPS President and CEO. 

“In a relatively short time, Bai has carved out a leadership position in the enhanced water category and has now extended that success into other fast-growing and profitable categories. 

“We're equally impressed with their innovation pipeline, which will continue to meet the needs of consumers seeking great tasting, low-calorie beverages with natural flavors and no artificial sweeteners.”

Young continued, “Bai has contributed greatly to our allied brand lineup since we began distributing it broadly in 2013. Adding it to the broad range of choices and options in our company-owned portfolio is a natural next step.”

“Moving forward, we will empower Bai's management team to continue the breakthrough and disruptive branding and innovation that have revolutionized their categories and work with them to put the brand in front of more consumers in more places.” 

Bai founder Ben Weiss, who will continue to run the country, said: “Over the past seven years, Bai has proven to be an agent of change in a marketplace that is rapidly evolving.”

“We've worked tirelessly to challenge the notion that better-for-you beverages can't taste good. On our journey, we found a strong ally in DPS, an ally who embraced our mission to change the way the world drinks.”

“Now, it only makes sense to continue our quest together. We are thrilled to join the DPS family and create a new path forward with infinite possibilities.”

The two acquisitions come as sales of traditional carbonated drinks fall and sales of functional beverages, such as coconut water and fermented tea, rise in the US.