If you are new to my blog, you should check out my post on Coca-Cola’s strategy to enter the health drink segment. For the last 3-4 years, both Coke and Pepsi have been under tremendous pressure from investors due to the abysmal growth in the aerated drinks.
The primary reason for the slow/stagnant growth is mainly due to the change in consumer behavior. With the rise in cases of diabetes and other health issues, consumers are now considering healthier options such as health drinks. Coca-Cola had gauged this change early and is now working on bringing new products into the health drink segment. As part of its strategy, Coca-Cola has made some investments in the recent past.
This includes the acquisition of 50% equity in Bahrain-based Aujan Industries’ beverage business for close to $1billion in 2012, brands of which include Rani Float juice and Barbican malt beverage. At the time of the acquisition of Aujan, one of the largest independent beverage companies in the Middle East, the US beverage maker had said the deal allows it to expand its portfolio in the juice sector and drive long-term value for shareholders. In 2017, Coca-Cola acquired AdeS soy drink brand from Unilever at a whopping price of $575 million. (Shoup, 2017). Coca-Cola also re-branded its Diet Coke drink in 2018 for the North American market as part of its strategic planning.
In the recent move, Coca-Cola Co. bought a minority stake in a health drink Bodyarmor, backed by former basketball player Kobe Bryant. With this stake, Coke has become the second-largest shareholder in the company founded by Mike Repole. With Bodyarmor, Coke is targeting Pepsico-owned Gatorade drink. This Bodyarmor drink is infused with coconut water, vitamins, and potassium, the key ingredients athletes consuming as part of fitness.
(Image Source: https://www.truthinadvertising.org/bodyarmor/)
Last month, Coca-Cola posted a profit that beat analyst's estimates, thanks to the success of Diet Coke re-branding (Kaplan, 2018). It will be interesting to see how the new acquisition fares for Coca-Cola in 2019.
References:
Economic Times 2018. As juices race past fizzy drinks, Coca-Cola launches Rani Float [Online] Available at: https://economictimes.indiatimes.com/industry/cons-products/food/as-juices-race-past-fizzy-drinks-coca-cola-launches-rani-float/articleshow/64581458.cms
Adage 2018. Coca-Cola buys stake in sports drink backed by Kobe Bryant [Online] Available at: http://adage.com/article/cmo-strategy/coca-cola-buys-stake-sports-drink-backed-kobe-bryant/314601/.
Bloomberg 2018. Coca-Cola's Focus on Healthier Drinks Pays Off [Online] Available at: https://www.bloomberg.com/news/articles/2018-04-24/coca-cola-s-focus-on-healthier-drinks-pays-off-with-profit-beat.
Shoup, M.E. 2017. Coca-Cola acquires AdeS soy drink brand from Unilever [Online] Available at: https://www.beveragedaily.com/Article/2017/03/30/Coca-Cola-acquires-AdeS-from-Unilever.