Coca-Cola gets a stake in Suja
In August 2015, Coca-Cola (KO) bought a ~30% stake in Suja Juice. Suja Juice is a California-based manufacturer of organic juices that uses a technology called high-pressure processing to preserve nutrition and taste. Coca-Cola didn’t reveal financial details of the transaction. However, according to various sources, including BevNet, Coca-Cola invested $90 million for a 30% stake in Suja Juice.
Coca-Cola’s still beverages outperform
In 2Q15, Coca-Cola’s still beverages performed better than sparkling beverages across all the segments. Overall, the unit case volume of the company’s global still beverage portfolio grew 5%, driven by strong demand for ready-to-drink tea, packaged water, and value-added dairy. This growth was unfavorably impacted by a 1% decline in juice and juice drinks volumes. The company reported 1% growth in its global sparkling beverage volume.
The acquisition of a minority stake in Suja Juice will further strengthen Coca-Cola’s still beverage portfolio.
About Suja Juice
From a humble beginning three years ago as a home-delivery juicing company in San Diego, Suja Juice has emerged as America’s second most promising company in 2015 based on rankings by Forbes magazine. The rapidly growing company generated $42 million in revenue in 2014.
Suja Juice aims to bring its organic, cold-pressured juice products to consumers at affordable prices. Goldman Sachs’s (GS) merchant banking division has also purchased a stake in Suja Juice. These deals will help boost the manufacturing capacity of Suja Juice in order to meet the growing consumer demand for organic juices.
The deal with Coca-Cola will also give Suja Juice access to Coca-Cola’s extensive distribution network. And Coca-Cola’s investment in Suja Juice will help the beverage giant gain access to a healthy beverage category. Coca-Cola constitutes 4.8% of the portfolio holdings of the iShares Global Consumer Staples ETF (KXI) and 2.1% of the iShares Russell Top 200 Growth ETF (IWY).
Coca-Cola’s peers are also focusing on the still beverage category. In August 2015, Dr Pepper Snapple (DPS) purchased an 11.7% stake in BA Sports Nutrition, the company that owns the BodyArmor sports drink line. This transaction will help Dr Pepper Snapple compete with established brands like Gatorade, owned by PepsiCo (PEP), and Powerade, owned by Coca-Cola.
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