Coca-Cola buys BodyArmor for $5.6bn to rival Pepsi’s Gatorade

Coca-Cola Co said on Monday (1) that it will buy the remaining stake in BodyArmor for $5.6 billion, while the soft drink maker expands its sports drinks portfolio to face the market leader, PepsiCo Inc, with Gatorade.

The deal marks a shift in the strategy of the world’s largest beverage maker, after spending the past year offloading or discontinuing brands, including its own energy drink brand, to focus on Coca-Cola soft drinks.

The deal, which values ​​BodyArmor at about $6.59 billion, is Coca-Cola’s largest for a single brand, and comes about three years after the company bought British coffee chain Costa for $5 .1 billion.

BodyArmor, marketed as an electrolyte-filled energy recovery drink for athletes, currently earns about $1.4 billion in annual retail sales and has a 50% growth rate, Coca-Cola said.

“This gives Coke a wide range of products in the fast-growing sports hydration category. It’s a great premium brand that has the opportunity to expand over time,” said Edward Jones analyst John Boylan of BodyArmor, which gained popularity after basketball star Kobe Bryant backed it in 2013.

However, Boylan believes the big deal would only “give Coke a solid second-place position in an attractive category.”

Coca-Cola, which first acquired a 15% stake in BodyArmor in 2018, said brand co-founder Mike Repole will stick around after the agreement to advise on marketing and packaging the products.

By the time Coca-Cola took over its initial stake, BodyArmor was valued at $2 billion, according to a report by the Sunday Wall Street Journal.

The deal comes as Coca-Cola and rival PepsiCo face huge bottlenecks in the supply chain, forcing companies to raise prices to curb rising freight and raw material costs.

PepsiCo even said it had to deal with the shortage of Gatorade bottles.