PepsiCo to sell Tropicana and other juice brands for $ 3.3 billion to move away from high-sugar drinks

The funds will be used to develop and grow a portfolio of health-focused snacks and calorie-free drinks

PEPSICO yesterday unveiled a $ 3.3 billion (Rand 47.4 billion) sale of its brands of Tropicana juice and other juices in North America to French private equity firm PAI Partners, as it is looking to simplify its product line and move away from high sugar drinks.

The company, which bought the orange juice maker in 1998 for around $ 3.3 billion and the American Naked Juice almost a decade later for $ 150 million, will retain a 39% stake in the new joint venture and will have exclusive distribution rights in the United States for the brands.

The sale would give PepsiCo the funds to grow and grow its portfolio of health-focused snacks and calorie-free drinks, chief executive Ramon Laguarta said, as the company focuses on more profitable brands.

Rival Coca-Cola Co has also streamlined its product line over the past year, dropping its TaB and Coca-Cola Energy diet soda brands in the US and selling its ZICO coconut water brand.

“Companies are struggling to provide effective marketing support behind an endless number of brands that often compete for very similar opportunities,” said Stephen Rannekleiv, analyst at Rabobank Food and Beverage in May.

He added that companies were looking to launch new products developed in-house.

The juice business achieved approximately $ 3 billion in net revenue in 2020 for PepsiCo, with operating profit margins lower than the group’s.

The deal is one of many food and beverage investments PAI has made in recent years. In 2019, Nestlé SA sold its US ice cream business, including brands such as Häagen-Dazs, to a joint venture backed by PAI in a deal valued at $ 4 billion.

REUTERS


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