PepsiCo made an announcement that it has agreed to sell its juice brands such as Naked, Tropicana, and other North American juice brands for $3.3 billion to PAI Partners, a French private equity firm.
The deal made by PepsiCo with the French equity firm will net for Pepsi. This deal will make Pepsi also receive a 39 % stake in a brand-new joint venture with PAI Partners. Pepsi will also get the exclusive U.S. distribution rights for Tropicana, Naked, and the other juice brands for varied channels, like food service.
PAI Partners will now also have an irrevocable option of buying certain juice businesses of Pepsi in Europe, as per the deal.
The transaction between PepsiCo and PAI Partners might happen sometime late this year or during early 2022. Pepsi will use the proceeds garnered from this sale to solidify its balance sheet to be able to invest back in its business.
In 2020, the brands involved in the deal managed to generate roughly about $3 billion in revenue for Pepsi. Pepsi in 2020 reported net sales of $70.37 billion.
The Covid-19 pandemic brought about a focus on immune-boosting foods and drinks. With the focus shifting onto healthy lifestyles and good nutrition, the role of fruit juices in the consumer’s routine has become uncertain. Also, the ongoing concern about drinks high in sugar seems to be another reason why the long-term trend has been declining.
The sales of orange juice surged in 2020, as consumers sought drinks containing more vitamin C to boost immunity. As a response to the pandemic, several food and beverage businesses, including big companies like rival Coca-Cola, have spent much of 2020 trimming their portfolios.
The rise in shares of Pepsi by 5% has given Pepsi a market value of $216 billion. In Pepsi’s latest quarter, it has seen its quarterly revenue grow exponentially. The demand for its drinks in restaurants.