Food and nonalcoholic beverage companies have been focusing on new products that cater to consumers’ health and wellness needs. From introducing low- or no-calorie varieties to emphasizing organic ingredients, nonalcoholic beverage companies are undertaking several initiatives that will help them grow beyond the traditional carbonated soft drink category. Earlier in this series, we discussed how still or noncarbonated beverages are posting higher volume growth than carbonated soft drinks.
At the Beverage Digest Future Smarts Conference in New York City in December 2015, PepsiCo (PEP) announced its plan to launch an organic version of Gatorade, its market-leading sports drink brand. In February 2016, PepsiCo also launched Naked Pressed, a sub-line of cold-pressed, high-pressure-processed or HPP juices under the Naked Juice brand. HPP technology helps preserve nutrition and taste. PepsiCo accounts for 0.9% of the iShares S&P 500 Growth ETF (IVW) and 2% of the iShares Russell Top 200 Growth ETF (IWY).
Nonalcoholic beverages are also expanding in the health and wellness market through strategic investments in entities or brands that have a presence in growth categories. In August 2015, Coca-Cola (KO) acquired a ~30% stake in Suja Juice, a California-based manufacturer of organic juices that uses HPP technology. Suja Juice ranked second in Forbes Magazine’s list of America’s most promising companies in 2015. Suja Juice generated $42 million in revenue in 2014. Coca-Cola’s purchase of a minority stake in Suja Juice should help further strengthen its still beverage portfolio. In January 2016, Coca-Cola also acquired a minority stake in Chi Limited, Nigeria’s leading dairy, juice, and snacks company. Aside from Suja Juice, other players that provide cold-pressed juices are Pressed Juicery and RIPE. In 2015, Campbell Soup (CPB) launched the cold-pressed HPP juice line by the name of 1915 by Bolthouse Farms.
We’ll continue to discuss healthier beverage products and innovations in the next part of this series.