- PepsiCo is in talks to acquire All Market, the owner of coconut water brand Vita Coco, for less than $1 billion, according to Reuters.
- Vita Coco is sold in 30 countries and is the global leader in coconut water, with a 26% share of a market worth $2.5 billion, according to data tracker Euromonitor International. The beverage's investors include Madonna, Demi Moore and Matthew McConaughey.
- Reuters reported the offer from PepsiCo is less than the $1 billion that All Market's owners have been seeking, and there is no certainty that negotiations will result in a deal.
PepsiCo, which hasn’t made a large deal since its $13.4 billion purchase of Quaker Oats in 2000, is facing many of the same challenges as other businesses in the food and beverage industry. Most notably, it's working through a push by the consumer toward better-for-you foods and away from those containing trans fats, sugar and artificial colors and flavors. With soda sales continuing to decline, PepsiCo and other soft drink makers are focusing more attention on increasing sales of healthier items.
PepsiCo CEO Indra Nooyi told an audience at the Beverage Forum in April that the maker of Doritos, Quaker Oats and its namesake soda has looked at large deals, but found none that would create the long-term growth she is looking for. Instead, Nooyi said PepsiCo would focus its attention on smaller acquisitions, and a purchase of Vita Coco would be proof she is committed to following through on that promise.
PepsiCo announced last year that by 2025 it wanted to have sales growth of its Everyday Nutrition Products — including grains, fruits and vegetables, dairy, protein and hydration — outpace the rest of its portfolio. Other soda makers have been active in buying healthy drink companies too. These include Dr Pepper Snapple, which paid $1.7 billion last November to acquire Bai Brands, a maker of fruit-flavored, antioxidant-infused beverages.
Coconut products first entered the mainstream with the sudden popularity of coconut water as a natural sports drink a few years ago. Sales in the coconut water category are expected to double from $2.7 billion last year to $5.4 billion by 2020, according to a report by Zenith Global reported on in Beverage Industry. Coconut water would fit in nicely with PepsiCo's long-term agenda, while allowing the beverage and snack maker to become a market leader in the popular beverage category.
Regardless of whether PepsiCo buys Vita Coco, expect the company to be on the lookout for more deals that build long-term growth and expand its healthier product line.