PepsiCo has recently announced its decision to sell off some of its juice brands in North America, with one of the major brands being Tropicana. The sale is set to happen with French private equity firm PAI Partners acquiring Tropicana for $3.3 billion, as reported by Reuters.
This strategic move by PepsiCo is part of its effort to streamline its product offerings and shift away from traditional sugary beverages. CEO Ramon Laguarta stated that the proceeds from this sale will be allocated towards developing healthier snacks and zero-calorie beverages, as these segments are experiencing increased demand due to growing health awareness among consumers. By focusing more on in-house product development, PepsiCo aims to cut costs and stay competitive in the market. This trend is being mirrored by other major players in the industry, such as Coca-Cola Co., who discontinued some of their brands like TaB soda and Coca-Cola Energy to concentrate resources on products like ZICO coconut water.
PepsiCo is divesting Tropicana and other juice brands for $3.3B.
“We came to the conclusion that given our orientation towards higher growth and improving our margins, Tropicana was probably less a fit with the portfolio than it was before,” CFO Hugh Johnston says. pic.twitter.com/piQ5wzCkHS
— Yahoo Finance (@YahooFinance) August 3, 2021
Stephen Rannekleiv, a food and beverage analyst at Rabobank, highlighted the challenge faced by companies in effectively marketing numerous brands that cater to similar consumer needs. PepsiCo’s ownership of Tropicana dates back to 1998 when they acquired the brand for the same $3.3 billion figure now being used for the sale. Despite relinquishing the majority stake in Tropicana, PepsiCo will retain partial ownership through a joint venture. Additionally, PepsiCo will maintain exclusive US distribution rights for Tropicana juices even after the sale.
