Pepsi Squeezes $3.3 Billion Out of Tropicana Sale

It’s official, PepsiCo is all out of juice. Not metaphorically — we’re talking about actual juice. On Tuesday, the American beverage giant said it is selling its Tropicana orange juice brand — as well as Naked and other juice lines…

Jennifer
Image Credit: Pepsico
Sign up for insightful business news.

It’s official, PepsiCo is all out of juice. Not metaphorically — we’re talking about actual juice.

On Tuesday, the American beverage giant said it is selling its Tropicana orange juice brand — as well as Naked and other juice lines — to French private equity firm PAI Partners for $3.3 billion. Ditching juice will allow Pepsi to focus on growth markets, as consumers try to avoid glucose overload by opting for less sugary drinks.

Cooling Their Peels

Pepsi and perennial taste-challenge rival Coca-Cola are both on a quest to siphon the sugar from their product portfolios. But that doesn’t mean Pepsi’s juice business is past its shelf life.

Quite the contrary, in fact — Tropicana is still the best-selling fridge-dwelling orange juice in America, and juices and fruit drinks earned PepsiCo $3 billion last year. But profit margins still lagged behind much of the company’s $70 billion business, and juice’s future is looking cloudier than concentrate:

  • People drank 2.8 billion gallons worth of juice and fruit drinks last year. That may sound like a lot, but it’s 19% less than households consumed a decade ago, according to Beverage Marketing Corp. And Pepsi’s sales of fruit drinks have fallen 36% in that time.
  • Energy drinks are all the rage nowadays — U.S. sales climbed to $3.7 billion last year from $2.8 billion in 2015, and Pepsi bought segment leader Rockstar last year for $3.8 billion to pair with its Mountain Dew Kickstart, Game Fuel, and AMP brands.

PAI, for its part, has done plenty of cherry-picking from companies trying to cut back on sugar — in 2019, the company relieved Nestlé of its Häagen-Dazs, Drumstick, and Mövenpick ice-cream brands.

A Little Juice Left: The deal between PepsiCo and PAI is valued at $4.5 billion in total, with the beverage giant retaining a 39% stake in the joint venture. Coca-Cola, meanwhile, still owns Simply Orange, America’s number two orange juice after Tropicana.

Analysis more

Tale of the Tape: Warren Buffett and Cathie Wood

Farm Strong: Understanding Agriculture as an Investment

Recent News

A Strong Dollar Could Save a Horrid M&A Environment

Retailers Struggle to Move Inventory, Slowing Shipping Industry

Disney and Dish Go To War in Contract Renewal Negotiations

Minneapolis Businessman Latest American to Vy for English Soccer Ownership

[subscribe-form listid="1ebbb697aaa44fb1971fe0a3c42ff841" source="organic" medium="organic" redirect-url="https://thedailyupside.com/thank-you/"]
<form action="" class="subscribe-form "> <input type="text" name="subscribe_form_email" placeholder="Enter your email"> <input type="text" name="subscribe_form_name" placeholder="Enter your name" value="" class="c-subscribe-from_field"> <button class="c-btn" id="subscribe-form-submit" type="submit">Subscribe</button> <div class="subscribe-form-message"></div> <div class="subscribe-form-vars"> <input type="hidden" class="subscribe-form-param" name="params[listid]" value="1ebbb697aaa44fb1971fe0a3c42ff841"> <input type="hidden" class="subscribe-form-param" name="params[source]" value="organic"> <input type="hidden" class="subscribe-form-param" name="params[medium]" value="organic"> <input type="hidden" class="subscribe-form-param" name="params[redirect_url]" value="https://thedailyupside.com/thank-you/"> </div> </form>