PepsiCo to buy SodaStream for US$3.2bn in further health and eco push

PepsiCo has plans to acquire sparkling water brand SodaStream for US$3.2 billion cash transaction, in what seems to be another step in the company’s promotion of health and wellness. This is through environmentally friendly, cost-effective and “fun-to-use beverage solutions”, the statement said.

Through the acquisition SodaStream will leverage on PepsiCo's marketing expertise, distribution capabilities, global reach, R&D, design to further expansion and innovation. This is combined with SodaStream's differentiated product range. The transaction is expected to close in January 2019.

Ramon Laguarta, CEO-elect and president, PepsiCo, said that SodaStream is “highly complementary and incremental” to its business and adds to its growing water portfolio. This is while catalysing the brand’s ability to offer personalised in-home beverage solutions around the world.

“From breakthrough innovations like Drinkfinity to beverage dispensing technologies like Spire for foodservice and Aquafina water stations for workplaces and colleges, PepsiCo is finding new ways to reach consumers beyond the bottle, and today's announcement is fully in line with that strategy,” Laguarta explained.

PepsiCo chairman and CEO Indra Nooyi added that the focus SodaStream provides is “well-aligned” with PepsiCo’s Performance with Purpose philosophy. This is the act of making more nutritious products while limiting environmental footprint.

"I am excited our team will have access to PepsiCo's vast capabilities and resources to take us to the next level. This is great news for our consumers, employees and retail partners worldwide,” Daniel Birnbaum, SodaStream CEO and director said.

This is not PepsiCo’s first move into the sparkling water segment. Earlier this year, the company launched bubly, a new entrant which Nooyi revealed was performing “exceeding well” in a recent earnings call. The company also launched Gatorade Zero, a “hydration innovation” with 0 sugar which Nooyi added was also "off to a great start". In 2017, the company also launched a premium water brand Lifewtr, strengthening its role in healthier beverages, as well as taking aim at Coca-Cola’s Smartwater.

The move comes on a the back of the company’s “trending improvement” in both net revenue and operating profit performance in its North American beverage business, Nooyi explained. She added that the brand intends to increase investment in terms of brand support in the second half of the year, with the goal of driving further top line improvement.

“At the same time, we remain laser focused on higher-growth categories with appropriate brand investment and robust innovation,” she said.

Closer to home, PepsiCo opened a new plant in Singapore to support the manufacture of new product formulations to serve the demands of Asia Pacific consumers for healthier options. This will include low or no sugar versions of its existing beverages, and new innovations in categories like hydration and teas.

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