- Dr Pepper Snapple Group is acquiring an 11.7% stake in sports drink startup BodyArmor, valued at $20 million. Vitaminwater co-founder Mike Repole leads the startup, which is backed by several sports star investors, including NBA player Kobe Bryant, NFL quarterback Andrew Luck, and MLB outfielder Mike Trout.
- With this stake, Dr Pepper Snapple takes a step into the fast-growing $6.81 billion sports drink market in the U.S., which was led by PepsiCo Inc.'s Gatorade with 77% of the market and Coca-Cola Co.'s Powerade with 20% in 2014.
- Sales are up 180% so far this year, BodyArmor reported, from $30 million in retail sales in 2014. While BodyArmor is currently sold in about 25,000 stores and 40 states, Dr Pepper Snapple will boost distribution to make BodyArmor available nationally in twice as many stores in 2016.
Soda sales have been on the decline for a decade, leaving companies like Dr Pepper Snapple Group scrambling to find new revenue streams, though it's been faring decently in growth. Other verticals, like ready-to-drink tea, have proven profitable for soda companies, but sports drinks represent another category that has the potential to grow as a soda alternative.
In addition, sports drinks also often benefit from celebrity endorsements, particularly from renowned athletes that either become paid sponsors or, as in BodyArmor's case, invest their own money into these brands.