PepsiCo taps healthier drinks market with SodaStream deal

AFP  |  New York 

today said it was buying Israeli company for USD 3.2 billion as the US giant contends with falling demand for sugar-laden soft drinks among health-conscious consumers.

makes machines that carbonate home tap water, and both and its arch-rival have been diversifying away from their mainstay fizzy drinks in part to counter the onset of anti-obesity sugar taxes around the world.

offers consumers "the ability to make great-tasting beverages while reducing the amount of waste generated", Indra Nooyi, who is stepping down following 12 years at the helm, said in a statement.

Along with the health appeal of its product over traditional soft drinks, SodaStream's reusable bottles are another marketing point exploited by the Israeli company as consumers are urged to shun polluting

Under the cash deal, PepsiCo is to pay USD 144 per share for SodaStream's outstanding stock, a premium of 11 per cent over its closing price on Friday.

SodaStream shares were up more than 10 per cent at USD 143.02 in pre-market US trading today. PepsiCo stock was flat ahead of the open.

Nooyi said SodaStream's approach was aligned with "our philosophy of making more while limiting our environmental footprint".

Ramon Laguarta, who is set to replace Nooyi in October, added: "SodaStream is highly complementary and incremental to our business, adding to our growing water portfolio."

PepsiCo launched this year, a new based on tap water. Consumers buy flavoured pods to inject a choice of tastes into a reusable bottle, such as acai berry, coconut-watermelon and elderflower.

Coca-Cola, for its part, said last week that it was buying a stake in BodyArmor, a maker of sports drinks that is endorsed by retired basketball star

The drink is a rival to PepsiCo's Gatorade, and the US titans have also been tussling in the market for diet sodas.

Matthew Barry, of beverages at Euromonitor International, said deals like the SodaStream purchase were vital for PepsiCo as it passes to new management.

"With sugary carbonates and juices struggling and no turnaround in sight, mitigating the losses through newer and will be essential for PepsiCo," he said in a research note.

"Consumers around the world are more and more interested in low-sugar options. Sugar taxes also represent a prominent threat.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, August 20 2018. 19:20 IST