03 Nov 2021 Coke buys makes it’s biggest buy ever
Coca-Cola Co is buying full control of BodyArmor for $5.6-billion in a cash deal that values the sports-drink brand at about $8-billion, amping up a rivalry with Gatorade.
Coke bought a 15% stake in BodyArmor in 2018 for $300-million at a $2-billion valuation, reports the Wall Street Journal. Coke’s bottling network then took over distribution of BodyArmor, earning the beverage giant an additional 15% equity stake for its distribution and partnership in building the BodyArmor brand.
Coke is buying the remaining 70% from the company’s founders and investors, as well as a group of professional athletes including the NBA’s James Harden and MLB’s Mike Trout who invested and helped market the drink.
The estate of the late Kobe Bryant, an early backer of BodyArmor, stands to collect roughly $400-million for its stake. Bryant invested $6-million and had served on the BodyArmor board before he died in 2020.
Gatorade still dominates the sports-drink market, though BodyArmor sales have been climbing quickly. BodyArmor expects to generate about $1.4-billion in retail sales this year, Coke said. BodyArmor’s sales were about $250-million in 2018 when Coke first invested in the startup.
Gatorade, which is owned by PepsiCo, accounts for the lion’s share of the $8.4-billion spent on sports drinks in the past year in US retail stores tracked by Nielsen.
The BodyArmor transaction would be the largest brand acquisition in Coke’s history, eclipsing the $5.1-billion paid in 2018 for Costa Coffee, a foray into the coffee-shop business.
Chief Executive James Quincey has been pushing the company to become a “total beverage company.” In addition to expanding its coffee and sports-drinks offerings, Coke recently introduced an alcoholic version of its Topo Chico sparkling water.
Another large Coke acquisition was its $4.1-billion purchase in 2007 of Glaceau, the company behind the vitaminwater and smartwater brands. Michael Repole, the co-founder and principal investor in BodyArmor, also helped create and sell Glaceau to Coke.
BodyArmor, based in Queens, NY, was launched in 2011 by Repole’s co-founder, Lance Collins, an entrepreneur behind successful brands including Fuze tea and Core bottled water. Keurig Dr Pepper has a 12.5% stake in BodyArmor.
BodyArmor’s products include sports drinks, alkaline water and caffeinated sports drinks. None of them contain artificial sweeteners, colours or flavours. The brand has marketed its offerings as healthier alternatives and enlisted younger athletes as brand ambassadors.
BodyArmor will be managed as a separate business within Coca-Cola’s North America operating unit and will continue to be based in New York, Coke said. BodyArmor’s executive leadership team, including Repole, will stay on to lead the brand.
Source: WSJ, TheStreet.com