Dr Pepper, Pepsi Snap Up Alternative Beverage Makers -- 2nd Update
November 22 2016 - 10:10AM
Dow Jones News
By Austen Hufford
Soda makers Dr Pepper Snapple Group Inc. and PepsiCo Inc. said
Tuesday that they had each bought an upstart beverage maker that
promote drinks seen as healthier and more natural, as consumers
continue to turn away from traditional sodas.
Volumes of soda have been challenged in recent years and more
countries have weighed special taxes on high-calorie drinks in a
bid to combat rising obesity and diabetes.
In response, traditional soda makers have diversified beyond the
sugary drinks.
Tuesday, Dr Pepper said it agreed to buy Bai Brands, the maker
of low-calorie, coffee-fruit drinks, for $1.7 billion. PepsiCo,
meanwhile, said it would buy KeVita, a maker of fermented probiotic
and kombucha beverages, for an undisclosed price.
Bai is known for its drinks that are made with extracts from the
fruit that surrounds the coffee bean. The beverages are marketed as
using natural sweeteners and being rich in antioxidants and low in
calories. Bai's product lineup includes enhanced water, carbonated
flavored water, coconut water and ready-to-drink teas.
KeVita makes a type of Kombucha, a fermented tea beverage, and
sells probiotic beverages. Its drinks are all organic, don't
include genetically modified organisms, and are gluten-free and
vegan.
Soda makers have adapted to changing consumer tastes by
marketing soda as a special treat and by selling smaller sizes.
Companies have also said they are working to reduce the amount of
sugar in their products
Dr Pepper Snapple is already an investor in Bai and has
distributed Bai products for a few years. Bai, which was launched
in Princeton, N.J., in 2009, expects to have about $425 million in
net sales in 2017. Meanwhile, Pepsi distributes KeVita, which was
founded in 2009, in Ojai, California.
The move is also the latest upstart to be bought by a larger
company in an incumbent industry. Consumer products company
Unilever PLC said it would buy Dollar Shave Club in July after the
quickly growing direct-to-consumer company had challenged Procter
& Gamble Co.'s Gillette's dominance.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
November 22, 2016 09:55 ET (14:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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