Pepsi gives up on juice: Soda maker will sell Tropicana and Naked brands for $3.3 billion because people drank 36% less of the products over the past 10 years
- PepsiCo announced Tuesday that it will sell its Tropicana and Naked Juice brands for $3.3 billion following a 36percent drop in sales over the past 10 years
- The move comes as consumers are increasingly steering clear of fruit drinks because of their high calorie and sugar count
- Juice consumption also had a steep decline in the same period, falling 19percent from 3.4billion gallons in 2011 to 2.8billion gallons in 2020
- PepsiCo sold the brands to private-equity firm PAI Partners, which bought Nestle's U.S. ice cream businesses, including Häagen-Dazs, in 2019
PepsiCo Inc. is ditching juice.
The soda giant will be selling its Tropicana and Naked Juice brands for $3.3 billion to private-equity firm PAI Partners, following a 36 percent drop in sales over the past 10 years.
The move comes as consumers increasingly are steering clear of fruit drinks because of their high calorie and sugar count, while more are opting for beverages like seltzer, plant-based milks and fresh-pressed fruit and vegetable blends.
Juice consumption also had a steep decline over the past decade, falling 19 percent from 3.4billion gallons in 2011 to 2.8billion gallons in 2020, according to Beverage Marketing Corporation.
PepsiCo will keep 39percent non-controlling stake in the brands in the joint venture, which is valued at roughly $4.5 billion, according to the Wall Street Journal.
PepsiCo announced Tuesday that it will sell its Tropicana and Naked Juice brands for $3.3 billion following a 36percent drop in sales over the past 10 years
The move comes as consumers are increasingly steering clear of name brand fruit drinks because of their high calorie and sugar count
Data from the US Department of Agriculture shows the drop in orange juice sales over five years, ending at their most recent data in 2020. Demand for its orange juice rose during the pandemic, when more people were making breakfast while working from home
According to the Wall Street Journal, PepsiCo intends on using the funds from its sale for future investments and to augment its balance sheet. Last year, PepsiCo bought Rockstar Energy Beverages for $3.85 billion and, in 2018, it bought SodaStream, the producer of a kitchen appliance that carbonates water, for $3.2billion.
PepsiCo Chairman and CEO Ramon Laguarta, who assumed the post in 2018, said in a press release on Tuesday that the sale 'will free us to concentrate on our current portfolio of diverse offerings, including growing our portfolio of healthier snacks, zero-calorie beverages, and products like SodaStream which are focused on being better for people and the planet.'
PepsiCo yielded $3billion in net revenue from its juice ventures last year, compared with about $70 billion for the company as a whole, according to the Associated Press.
PepsiCo's share prices ultimately jumped between Monday and Tuesday, when it made the announcement
Shares have fluctuated between the two prices throughout Tuesday morning
PepsiCo's share prices ultimately jumped between Monday and Tuesday, when it made the announcement, going from Monday's 10am low of $155.79 a share to a high of $157 a share on Tuesday morning around the same time. Shares have fluctuated between the two prices over the past 24 hours.
PepsiCo bought Tropicana from Seagram in 1998 for $3.3 billion, when it was already the top refrigerated orange-juice brand in the U.S. The brand began in Florida in 1947 by Anthony Rossi, a Sicilian immigrant who was 21 when he came to America and had $25 to his name, according to an obituary in what is now known as the Tampa Bay Times. Rossi pioneered flash pasteurization and orange juice transportation via train from Florida to New York in 1970. He died in 1993 at 92.
PepsiCo bought Naked Juice in 2006 for $150 million, in one of its early pushes to diversify its repertoire. Friends Jimmy Rosenberg and David Bleeden founded the juice brand in California in 1983 and sold them on the beaches of Santa Monica.
Demand for its orange juice rose during the pandemic, when more people were making breakfast while working from home. U.S. retail sales of the product jumped about 38percent in March 2020 compared to March 2019, according to Nielsen.
But that serves as an outlier in a decade-long growing trend. According to the Associated Press, juice consumption in the U.S. peaked in 2003 at 4.2 billion gallons, but dropped to 3 billion gallons by 2017.
PepsiCo bought Tropicana from Seagram in 1998 for $3.3 billion, when it was already the top refrigerated orange-juice brand in the U.S. Above is a commercial for the brand, which aired throughout the 1980s
The above photo is from a 1987 ad for Tropicana, while it was owned by Seagram
Before Pepsi purchased the brand, it had already attempted to diversify its products with Tropicana Twister. The above ad from 1993 reveals the juices, which combined different tropical fruits
Coca-Cola has also picked up on the shift and announced last year that it would end production on its juice and smoothie brand Odwalla, CNN reported.
PAI is headquartered in Paris and is a known investor in consumer brands. In 2019, it bought Nestle's U.S. ice cream businesses, including Häagen-Dazs and Mövenpick, in deal valued at $4 billion, Reuters reported.
'We are delighted to bring these storied beverage brands into the PAI portfolio through another partnership with a leading global food and beverage company,' said Frédéric Stévenin, a Managing Partner at PAI, in a press release on Tuesday.
He continued, 'We believe there is great growth potential to be realized through investments in product innovation, expansion into adjacent categories, and enhanced scale in branded juice drinks and other chilled categories. We are also thrilled that PepsiCo will remain involved as our partner in the joint venture as we execute our plans to drive the future success of these brands.'
