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Suja Coke

Coke takes minority ownership stake in fast-growing Suja Juice

The deal represents the latest diversification move by Coke, whose sales have slowed as health-conscious consumers scale back on soda, which still represents about 70% of company revenue.

The beverage giant is paying roughly $90-million for a nearly 30% stake in Suja, with an option to buy all of the company after three years.

Suja had about $40-million in sales last year—a drop in the bucket for Coke, which booked $46-billion in revenue and whose billion-dollar brands include Sprite soda, Dasani water and Powerade sports drinks in addition to its namesake cola.

But Suja – whose namesake juices include combinations like apple, kale and cucumber – has posted rapid growth since being launched in 2012 and its sales more than doubled last year by tapping into consumer’s thirst for more fresh and natural drinks.

Suja uses high-pressure processing to kill bacteria instead of traditional heat. The method helps drinks retain more of their nutritional value and “is probably as close to raw” as packaged juice products “are ever going to get,” industry tracker Euromonitor International wrote in a recent report.

Suja juices – which include a mix of strawberry and flax seed – also sell at higher prices than mainstream juices, often fetching $6 or more for a bottle. The brand is currently available in about 12 000 stores in the US, including Whole Foods, Costco and Kroger.

Suja also said the merchant banking division of Goldman Sachs made a minority investment in the closely held company, whose celebrity investors include the actors Leonardo DiCaprio and Sofia Vergara.

Suja Coke 2“When we started out, we couldn’t have imagined the incredible growth and consumer demand we face today,” said Jeff Church, co-founder and CEO, Suja. “As we continued to innovate and find ways to democratise juice, we soon realised that for us to take the business to the next level and provide cold-pressured juice to even more people, we needed to find the right strategic partner. Coca-Cola has the ability to help us get there.”

Coca-Cola’s investment will give Suja access to the global beverage company’s vast chilled distribution network to stores across the US – and help Suja boost manufacturing capacity to meet growing consumer demand for its products. Finally, Suja will leverage Coke’s supply chain and procurement network to source materials such as bottles and caps at a lower cost.

The company remains committed to its promise to consumers – Suja juices and smoothies will always be USDA Certified Organic and cold-pressured using HPP.

Some fans are not convinced – and are unhappy to see the brand joining forces with ‘Big Soda‘.

Cold-pressed competitors include Starbucks Corp ‘s Evolution Fresh and Hain Celestial Group’s Blueprint.

Small, premium-priced juices with exotic mixes spanning fruit, vegetables and grains are growing faster than mainstream offerings like orange juice, which is dominated by Coke’s Minute Maid and Simply brands and PepsiCo’s Tropicana brand.

Coke acquired Odwalla, a premium juice maker, for about $180-million in 2001. But Odwalla has lost market share to Naked Juice, a competing premium brand that PepsiCo acquired in 2006.

In recent years Coke also acquired minority stakes in the makers of Zico coconut water and Honest Tea, an organic tea, before assuming control.

Coke has spent more than $4-billion since last year to acquire minority stakes in coffee machine maker Keurig Green Mountain and energy drink maker Monster Beverage Corp.

Coca-Cola: Read more on the deal here

 Related reading:

Suja CEO Jeff Church Talks Coke Investment:

US: Suja Juice named #2 in Forbes ‘Most Promising Companies’ of 2015

US: The freshness war that’s dividing the juice industry

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