Pepsico moving away from high-sugar drinks

 Pepsico moving away from high-sugar drinks

Pepsico moving away from high-sugar drinks.

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PEPSICO has unveiled a $3.3 billion (R47.4bn) sale of its Tropicana and other juice brands in North America to French private equity firm PAI Partners yesterday, as it looks to simplify its product range and move away from high-sugar drinks.

The company, which bought the orange juice maker in 1998 for roughly $3.3bn and US-based Naked Juice nearly a decade later for $150 million, will keep a 39 percent stake in the new joint venture and have exclusive US distribution rights for the brands.

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

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

“Companies are finding it difficult to provide effective marketing support behind an infinite number of brands that often compete for very similar occasions,” Rabobank Food and Beverage analyst Stephen Rannekleiv said in May.

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

The juice businesses made about $3bn in net revenue in 2020 for PepsiCo, with operating profit margins that were below the group’s.

The deal is one of the many food and beverage investments PAI has made over the last few years. In 2019, Nestle 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 $4bn.

Chris Louw

Featured Financial Writer for SA Shares - Read more about Chris's Bio -

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