USA – The Coca-Cola Company has offloaded the rights to Odwalla brand to Full Sail IP Partners, a Warburg Pincus-backed investment firm that acquires brands.
According to reports by Reuters, the deal does not include production and delivery of the juice and smoothie offering.
The move, according to Full Sail IP Partners, a joint venture between Warburg Pincus and brand licensing consultant LMCA, is aimed to revive the juice and smoothie label that the soft drinks giant discontinued last year.
The company plans to popularize Odwalla, which was founded in 1980, by marketing products under the brand with health benefits, including low sugar drinks, its CEO Alan Kravetz said in an interview.
It also expects to expand beyond the beverage category into food and supplements, as well as adopting a direct-to-consumer strategy.
“We think that nutrition, health, wellness, vitamins, minerals – ingredients that really provide health benefits, in addition to tasting good – are the wave of the future. We intend to include them in the Odwalla products,” Kravetz said.
When Coca-Cola bought Odwalla for US$181 million in 2001, the company was working toward expanding its stake in premium chilled juices.
Today, premium juices are no longer the original “from concentrate” mixtures that populated refrigerator cases in the early 21st century. Now they are cold-pressed, fresh and full of functional ingredients.
Although Coca-Cola had worked to update its Odwalla brand to suit the times — including launching a smoothie and kombucha blend line as well as a zero-sugar option, moving toward pure squeezed juice in lieu of concentrates, and even updating its bottles to look more like its cold-pressed rivals — it has done little to help boost the brand.
Even with a trendy positioning, juice sales have been squeezed for growth as consumers turn away amid rising concerns about the sugar content of fruit juice and its links to health problems such as obesity and heart disease, reports Food Dive.
In 2017, U.S consumers consumed the lowest amount of fruit juice per capita, 5.2 gallons, since the USDA started tracking the number in 1970.
This shift away from juice did not bode well for the Odwalla brand, which offered an array of smoothies and juices, some of which, like Mango Tango, had a whopping 58 grams of sugar in a 15.2-fluid-ounce bottle.
Not only is overall demand for these sugar-laden beverages reducing, but according to Euromonitor International data cited by the Journal, Odwalla ranked No. 7 on the list of drinks in U.S. retail stores that are made with not-from-concentrate juice.
With more than 500 beverage brands in its portfolio, Coca-Cola decided to ax this under-performing one.
By selectively offloading this brand, Coke is freed up resources to reinvest in brands that are profitable and are rising at a faster clip.
This legacy juice brand is not the only one that has been on the chopping block in recent years. In 2018, Coca-Cola unveiled its “zombie brand” strategy where the company identified products that have failed to grow over a three-year period and culled them.
The process began with the multinational’s Middle East and North Africa business unit, where the company has identified 125 underperforming SKUs for elimination and has already discontinued 60% of them. Odwalla is one of the biggest brands Coke has discontinued.
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