- Coca-Cola is spending $5.6 billion to purchase the remaining 85% stake it doesn't currently own in sports drink maker BodyArmor, the company said Monday. The acquisition is the largest ever for the 129-year-old company.
- BodyArmor is currently the second-largest sports drink in the retail channel behind PepsiCo's Gatorade, with sales of more than $1.4 billion and posting growth of about 50%, according to figures cited by Coca-Cola.
- Coca-Cola acquired a 15% stake in BodyArmor in 2018 for an undisclosed amount, with an opportunity to fully acquire the sports drink brand in the future. Earlier this year, Coca-Cola said it was interested in purchasing a controlling interest in the brand after filing a pre-acquisition notice with the Federal Trade Commission.
When Coca-Cola first invested in BodyArmor three years ago, the upstart had about $250 million in sales. Today, that figure has soared to more than $1 billion as the fast-growing, healthier-positioned sports drink has caught on with consumers through its use of coconut water, low sodium and high potassium levels, absence of artificial colors and use of sugar in place of high fructose corn syrup.
Coca-Cola's acquisition of the remaining stake in BodyArmor has been in the works for months, and it fits within a broader strategy put in place by CEO James Quincey to rebuild the Atlanta-based CPG into a "total beverage company."
Since Quincey took over in May 2017, Cola-Cola has acquired Topo Chico premium sparkling mineral water, purchased the remaining stake in dairy brand Fairlife and dolled out $5.1 billion to add Costa Coffee, which until now had been its largest purchase. At the same time, it has sold or ended production of Zico coconut water, Tab soda and Odwalla juice as part of a wider plan to eliminate an estimated 200 brands globally to focus on more profitable, faster-growing products coming out of the pandemic.
"What it means to be a total beverage company is always going to evolve because people's tastes and needs will continue to evolve," Quincey told Food Dive in 2019. "Five to 10 years from now, many brands may be different or might not exist. New ones will take their place. This journey doesn't end."
By acquiring full ownership of BodyArmor, Coca-Cola instantly becomes a more formidable player in the sports drink space, where PepsiCo's Gatorade brand holds about 70% market share. Coca-Cola can use its name innovation, market heft with retailers and global distribution to better position BodyArmor to try to cut in that lead. BodyArmor currently has an 18% market share with Coca-Cola's Powerade third at 13%, according to data cited by The Wall Street Journal.
As part of the deal, BodyArmor Co-founder Mike Repole and President Brent Hastie have agreed to remain with the company. Repole also will collaborate on Coca-Cola's still beverages portfolio.
Coca-Cola's relationship with the BodyArmor co-founder goes back several years. Repole co-founded Glaceau, the company behind the Vitaminwater and Smartwater brands, which Coca-Cola snapped up for $4.1 billion in 2007. Given Repole's history of churning out several popular better-for-you offerings, his insight could be especially valuable going forward for Coca-Cola as consumers drink more of these beverages.
BodyArmor not only gives Coca-Cola a better-for-you sports drink, but also a hydration beverage for consumers on the go. The brand also has a roster of high-profile athletes tied to it — including baseball player Mike Trout — giving additional credibility and boosting its reach among millennials and other consumers concerned about what they drink.
Coca-Cola said BodyArmor will be managed as a separate business unit in North America and will continue to be based in New York.