AP – PepsiCo will sell Tropicana and other juices to a private equity firm in a USD3.3-billion deal.
The New York drink and snack company will keep a 39 per cent non-controlling stake in a newly formed joint venture in the deal with PAI Partners.
Juice sales began to decline significantly in the early 2000s when low-carb diets grew in popularity, and that trend has continued with more families choosing instead to buy waters or other no- or low-calorie drinks.
Juice consumption in the United States (US) peaked in 2003 at 4.2 billion gallons, but by 2017, that had fallen to three billion gallons, wrote Brian Sudano, the managing partner of Beverage Marketing Corp. The group does not see that trend changing.
The juice business delivered about USD3 billion in revenue for PepsiCo last year, but at operating profit margins that were below the company’s overall margins, it said.
PepsiCo Chairman and CEO Ramon Laguarta said in a prepared statement yesterday that the deal “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”.
PepsiCo bought Tropicana in 1998 and the Naked juice brand, also part of the sale yesterday, about 10 years later. It was heading in another direction by 2018 when it bought SodaStream, the carbonated drink machine company, for more than USD3 billion.
PepsiCo Inc, based in New York, has the option to sell certain juice businesses in Europe.
The deal is expected to close late this year or early next year.