As soda pop sales continue to fizzle out, the maker of the iconic Coca-Cola Coke product must find ways to stay relevant in the changing beverage industry. This is why the company has been looking for interesting health-focused beverages to invest in, such as BODYARMOR’s line of sports drinks . On Tuesday, Coca-Cola announced that they have entered into a definitive agreement with BODYARMOR to acquire a minority stake in their company.
Both companies will have the opportunity to leverage each other’s strengths through this partnership. BODYARMOR will have access to Coca-Cola’s expansive bottling system and facilities, which will allow the sports drink manufacturer to accelerate their growth. As BODYARMOR expands their product line, Coca-Cola will slowly increase their ownership of the company in the future under defined terms. However, the financial terms of this agreement have not yet been disclosed.
“In a fast-moving and dynamic industry, and during a time of unprecedented change at Coca-Cola, we’re challenging the status quo and bringing innovative, boundary-less thinking to our strategic relationships to ensure we are offering the products consumers want,” said Coca-Cola North America President Jim Dinkins. “BODYARMOR is one of the fastest growing beverage trademarks in America and competes in exciting categories. I have no doubt it will prove to be a strong offering to our system alongside our already powerful hydration portfolio as we accelerate our position as a total beverage company.”
BODYARMOR will continue to produce their products independently under the leadership of their co-founder and chairman Mike Repole and his management team. Their trademarked products include BODYARMOR Sports Drink, BODYARMOR LYTE Sports Drink and BODYARMOR Sport Water. All three product lines contain no artificial flavors or colors and are made with potassium and other electrolytes, vitamins and coconut water.
“BODYARMOR is revolutionizing the beverage industry by providing the hydration that more and more of today’s athletes want and need. We are confident that this agreement gives us the best opportunity to significantly accelerate our mission to make BODYARMOR the world’s best premium sports performance and hydration brand. This is thanks to the strength and scale of Coca-Cola’s newly refranchised and energized bottling system in North America, as well as longer-term opportunities for international growth,” said Repole.
This acquisition is part of the Coca-Cola North America Venturing and Emerging Brands (VEB) investment portfolio. Coke’s VEB program has already helped startup beverage products such as Core Power, Zico, Hubert’s Lemonade and Suja. This investment portfolio allows Coca-Cola to have a hand in the expanding beverage industry as well as expand their product lines to become an overall beverage company.
However, they aren’t the only major pop company to invest in health-focused startups. Coke’s competitor Pepsi has been making similar moves with their acquisition of KeVita, a kombucha company in 2016. Pepsico also owns well-known healthy beverage brands such as Lipton Pure Leaf, Gatorade and Tropicana.
This trend comes as consumers turn away from high-sugar products and look for healthier beverage alternatives. In fact, Coke experienced a two percent decline in sales in the US during 2017 while Pepsi experienced a 4.5 percent decline. The overall carbonated beverage category experienced a 1.3 percent decline by volume in 2017. This all occurred while bottled water sales increased by 6.2 percent. This might be why Coke has invested in unique water brands such as Smartwater and vitamin water, which were ironically incubated by Mike Repole. The company’s new acquisition will allow them to stand against Pepsi’s Gatorade products.
“I am extremely excited about this agreement because the Coca-Cola system has an amazing track record of growing explosive brands that consumers love and allowing entrepreneurial start-ups like BODYARMOR to continue to be independent and focused on achieving the aggressive growth goals that we set out to achieve when we launched this amazing brand in 2011,” Repole said.
This transaction will make Coca-Cola the second largest shareholder in BODYARMOR, while Mike Repole is the first.