The Strategist

PepsiCo sells Tropicana and other juice brands for $3.3B

08/04/2021 - 03:39

PepsiCo Corporation announced sale of several juice brands, including Tropicana and Naked Juice, in North America.

j_lai via flickr
j_lai via flickr
They will be acquired by the French investment fund PAI Partners for $3.3 bn. According to the terms of the deal, PepsiCo will get a 39% stake in a new joint venture which will manage the brands and will retain exclusive rights for juice distribution in North America. PAI Partners will also get distribution rights for some juices in Europe. The total value of the new company is estimated at $4.5 billion and the deal is expected to close in late 2021 or early 2022.

This decision reflects PepsiCo's desire to reduce its brand portfolio by concentrating on key brands. Last October, PepsiCo's main rival Coca-Cola announced it was closing 200 brands, almost half of its entire portfolio. "It is difficult for companies to provide effective marketing support to an infinite number of brands that are often competing in very similar niches," says Stephen Rannekleiv, a food and beverage markets analyst at Dutch bank Rabobank.

In addition, the deal reflects declining consumer interest in sugary drinks, which include such juices. According to Beverage Marketing Corp, sales of juices and other fruit drinks fell 19% from 2011 to 2020; PepsiCo's sales of such drinks fell even more sharply, by 36%, during that period.