Olly Wehring

Pepsi spreads wings beyond CSDs

By: Olly Wehring - 8 January 2007 14:45

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In the space of five months, PepsiCo has once again demonstrated its willingness to expand beyond its traditional carbonated boundaries. In August, the company acquired the sparkling juice brand Izze Beverage Co. for US$75m from backers Greenmont Capital Partners and Sherbrooke Capital. Yesterday (8 January), Pepsi sealed a deal to buy the juice and smoothie company Naked Juice Co. from North Castle Partners for an undisclosed amount.

Neither acquisitions risk breaking the bank, but they are strategically important nonetheless.

Izze Beverage Co, for example, only had revenues around the US$25m mark when it was acquired. Such is the demand for drinks outside the CSD category at present, however, that the drinks and snack giant can expect significant growth once its distribution and marketing arms flex their muscles.

As one analyst said today: “Pepsi and Coke don’t make acquisitions of these beverage companies because they can. They see the need.”

Expect much more of the same this year, then.

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