Pepsi to sell Tropicana and other juice brands to PAI for $3.3 billion

PepsiCo Inc. has announced a $3.3 billion sale of its Tropicana and other juice brands in North America to French private equity firm PAI Partners as it looks to simplify its product range and move away from high-sugar drinks.

Pepsi purchased Tropicana in 1998 for roughly $3.3 billion and U.S.-based Naked Juice nearly a decade later for $150 million.

The company will keep a 39% stake in the new joint venture and have exclusive U.S. distribution rights for the brands.

The sale will give the company the funds to develop and grow its portfolio of health-focused snacks and zero-calorie beverages as the company focuses on more profitable brands, said Ramon Laguarta, Chief Executive Officer.

Rival Coca-Cola Co. has also been streamlining its product range over the past year with the discontinuation of its TaB diet soda and Coca-Cola Energy brands in the United States and the release of its ZICO coconut water brand.

“Companies are finding it difficult to provide effective marketing support behind an infinite number of brands that often compete for very similar occasions,” said Stephen Rannekleiv, Rabobank Food and Beverage analyst.

He added that companies are looking to launch new products that have been developed in-house.

PepsiCo’s juice businesses made about $3 billion in net revenue in 2020 with lower operating profit margins than the group’s.

The deal is one of the many food and beverage investments PAI has made over the last few years—in 2019, Nestle SA sold its U.S. ice cream business, including brands such as Häagen-Dazs, to a joint venture backed by PAI in a deal valued at $4 billion.

Centerview Partners is the financial advisor to PepsiCo on the deal, while J.P. Morgan Securities LLC to PAI.

SOURCE: ABS CBN