USA – American multinational food and beverage company PepsiCo has agreed to sell certain juice assets across North America and Europe to private equity firm PAI Partners for US$3.3 billion, as it looks to optimise its portfolio.
According to a report by FoodBev, the agreement includes a controlling stake in Tropicana, Naked, and other select juice brands across North America.
The deal which will lead to the creation of a new joint merger with PAI partners also includes an irrevocable option to sell certain juice businesses in Europe.
Upon completion of the transaction, PepsiCo will retain a 39% non-controlling minority interest in a newly formed joint venture managed by PAI Partners and an exclusive US distribution right for the brands for the small-format and foodservice channels.
PepsiCo says the sale will enable it to focus on growing its portfolio of healthier snacks, zero-calorie beverages, and better-for-you products.
Healthy snacks have particularly become popular in North America and Europe where consumers are increasingly becoming concerned about their health.
According to Euromonitor, the global healthy snacks market is forecast to reach US$98 billion by 2025, growing at a CAGR of 5.8% between 2020 and 2025.
The zero-calorie beverage segment is also gaining popularity thanks to concerns about increased prevalence of lifestyle diseases such as obesity and type 2 diabetes.
According to the latest market study released by Technavio, the global sugar-free food and beverages market size is projected to grow to US$72.37 billion by 2021, at a CAGR of close to 7% over the forecast period.
In Europe, pressure has been mounting for food beverage companies to lower the sugar and salt levels in their foods to protect the health of children.
Recently, the UK has announced a raft of legislations targeting junk food companies in an effort to protect its population from an impending health crisis.
Bowing to pressure, PepsiCo has vowed to cut sugar levels in beverages and to introduce more nutritious snacks in the EU by 2025.
“This joint venture with PAI enables us to realise significant upfront value, whilst providing the focus and resources necessary to drive additional long-term growth for these beloved brands,” said PepsiCo chairman and CEO, Ramon Laguarta.
“In addition, it 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.”
PAI Partners will become the majority shareholder of the transferred juice business, which will join previous investments such as Addo Food Group and Winterbotham Darby, and Ecotone, formerly Wessanen.
PepsiCo revealed that the juice businesses reported approximately US$3 billion in 2020 net revenue with operating profit margins that were below the company’s overall year operating margin.
The company plans to use the proceeds from the sale to strengthen its balance sheet and make organic investments in the business.
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