Pepsi-Cola Company Update
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PepsiCo has agreed to sell a controlling stake in its Tropicana and Naked juice brands to French private equity firm PAI Partners for $3.3 billion, as it seeks to focus on calorie-free beverages and products that it claims are better for the environment, such as SodaStream.
PAI also has a joint venture with Nestlé to own the Häagen-Dazs and Mövenpick ice cream brands, and will purchase a 61% stake in a new company that owns the rights to the juice brand. Pepsi will own the remaining 39%.
Pepsi CEO Ramon Laguarta said in a statement that the deal will “liberate” Pepsi, focusing on growth in other areas, such as healthier snacks, zero-calorie beverages and SodaStream products. It bought SodaStream, it made a device to carbonate water, $3.2 billion deal In 2018.
Frédéric Stévenin, managing partner of PAI, told the Financial Times that Tropicana and Naked are the “right and wrong parties” who are turning to healthier products.
“Due to the sugar content, the growth of the juice category has slowed in the past few years,” he said. “Juice contains a lot of natural sugar, but it also has benefits in terms of vitamins and fiber.”
However, he said that as consumers eat breakfast at home and try to boost their immune systems with vitamin C-rich products, sales have risen during the pandemic. This may bring “motivation” to the brand, he said.
PepsiCo said that the juice business’s net income in 2020 will be approximately US$3 billion.
The company said PepsiCo will use the proceeds from the sale to “strengthen its balance sheet.”
Indra Nooyi, the former CEO of PepsiCo, initiated the transition to a healthier portfolio, which was continued by her successor, Laguarta.
As young consumers increasingly choose healthier alternatives, large consumer brands such as Pepsi and its rival Coca-Cola are seeking to reduce products with higher sugar content.
However, the American consumer group has also been turning its attention to expanding its energy drink product portfolio. Pepsi last year acquired Rockstar Energy Beverages for US$3.85 billion, stably adding a fast-growing brand to its existing energy drinks, including Mountain Dew Kickstart, Game Fuel and AMP.
PAI manages a private equity fund of approximately 15 billion euros and will acquire the business from its seventh private equity fund, a 5.1 billion euro fund.