Pepsi Sells Juice Brands
Pepsi Sheds Tropicana and Naked
Yesterday, PepsiCo (PEP) announced that it is selling Tropicana, Naked, and other juice brands to French private equity company PAI Partners for $3.3 billion. Pepsi will keep a 39% stake in the new joint venture and retain exclusive rights for US distribution of the juice brands.
Pepsi’s juice business has weighed on its bottom line for some time. Sales of juice have ticked downward over the past decade despite a slight jump during the pandemic. Fruit juice was once thought of as healthy, but now many consumers are wary of the sugar it contains.
Beverage Giants Streamline Portfolios
Pepsi aims to streamline its product range and to move away from drinks that are high in sugar. With the proceeds from the sale, Pepsi will ramp up its investments in healthy snacks and zero-calorie drinks.
Pepsi’s rival Coca-Cola (KO) has also been simplifying its portfolio recently. The beverage giant stopped selling its Coca-Cola Energy and TaB diet soda brands in the US. It also shed ZICO coconut water from its portfolio and shut down its smoothie label, Odwalla.
Both Coke and Pepsi have had a difficult time marketing a vast array of brands, many of which occupy similar positions in the market and end up competing against each other. The two companies are both working to devote more resources to a smaller collection of brands.
Pepsi Looks Ahead
Pepsi’s stock price has climbed 5% this year, giving the beverage giant a market value of $216 billion. The company’s at-home snack and drink business saw significant gains while consumers practiced social distancing over the past year and a half.
In its most recent report, Pepsi said that quarterly revenue increased 20% year-over-year as demand for its products from restaurants, movie theaters, and stadiums returned. It will be interesting to see what comes next for Pepsi after the sale of its juice brands.
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