Pepsi makes $6B bid for two bottlers
NEW YORK (AP) — PepsiCo Inc.’s $6 billion bid to buy its two largest bottlers should make the owner of the Gatorade, Naked juices and Aquafina brands more nimble in a landscape where soft drinks have declined in popularity in favor of more healthful options such as water and juices.
The deals for Pepsi Bottling Group and PepsiAmericas would let Pepsi- Co control about 80 percent of its total North American beverage volume — something the company and analysts said would streamline the process of getting newer or smaller products to stores.
Consumers could see products such as Izze sparkling juice and Naked fruit juices at more places, Chief Financial Officer Richard Goodman said, since the company would be able to negotiate with retailers directly rather than persuading the bottlers that now control most distribution to include smaller products in their network.
“There is a need to be more nimble given the increasing role of [noncarbonated beverages], retailer consolidation and the changing competitive landscape,” PepsiCo Chairman and Chief Executive Indra Nooyi said.
The move shows how much the landscape has changed since 1999, when PepsiCo spun off Pepsi Bottling Group. At the time, the spinoff was a way for Pepsi to have a stake in a company that focused solely on making the soft drinks that dominated the market and were growing strongly.
Since then, though, soft-drink sales have slowed, Pepsi added more noncarbonated beverages such as Tropicana and Gatorade, and a different model is needed, Nooyi said.
“A move this big changes the entire landscape of the industry,” said John Sicher, editor of the trade publication Beverage Digest. “Today the beverage business consists of a greater diversity of products, and PepsiCo needs more control and flexibility over the route to market for its brands.”