August 5, 2021

PepsiCo is selling its Tropicana, Naked and other select juice brands in North America, with an option to also dispose of certain juice businesses in Europe, to PAI Partners for about $3.3 billion (€2.78bn).

The move will leave the food and beverage giant with a 39% non-controlling interest in a newly-formed joint venture with PAI, a private equity firm that will have the majority shareholding. PepsiCo will retain exclusive U.S. distribution rights to a portfolio for small-format and foodservice channels. The transaction is expected to close in late 2021 or early 2022, subject to customary conditions and regulatory requirements.

Commenting on the deal, PepsiCo CEO Ramon Laguarta said: “It will free us to concentrate on our current portfolio, including growing our healthier snacks, zero-calorie beverages, and products like SodaStream.”

PepsiCo to offload Tropicana uices
PAI expects to extend the ranges of the brands it is buying

Squeezing out extra sales from PepsiCo juices

PAI – which has several investments in the F&B space like Froneri, the world’s number two ice cream maker, and Ecotone, a leader in healthy and sustainable food – is looking to squeeze out extra sales from the juice brands. They delivered approximately $3 billion in net revenue in 2020 for PepsiCo, but with operating profit margins below the company’s average.

Frédéric Stévenin, a managing partner at the firm, said: “There is great growth potential to be realized through investments in product innovation, expansion into adjacent categories, and enhanced scale in branded juice drinks and other chilled categories.”

PepsiCo expects to use the proceeds from the sale to strengthen its balance sheet and to invest in its remaining businesses. The company’s F&B portfolio includes Frito-Lay, Gatorade, Pepsi-Cola and Quaker, with 23 brands generating more than $1 billion each in estimated annual retail sales.

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