SodaStream to help Pepsico ride the Clean Living slipstream
From reducing salt and fats from its snack business to the introduction of Bulby, its own line of flavored seltzer waters, PepsiCo continues to transform its business in line with shifting consumer preferences that are reflected in our Clean Living investing theme. With the acquisition of SodaStream, Pepsico takes several steps forward as it not only gains entrance into the home market but with a solution that is plastic bottle free and further shifts it away from sugary products and introduced healthier alternatives.
This move follows the recent introduction of healthier beverages at Starbucks and Coca-Cola testing vending machines offering clean, water-based drink alternatives. While we may not be in the wee-early innings of this Clean Living transformation, we are still quite far from anywhere near the 7th inning stretch. We expect more M&A activity of publicly traded clean(ish) companies, as well as private ones in the coming quarters as entrenched food and beverage companies, look to ride the Clean Living tailwind.
Beverage and snack giant PepsiCo announced plans Monday to acquire at-home carbonated drink maker SodaStream for $3.2 billion.
Purchase, New York-based PepsiCo agreed to pay $144 per share in cash for SodaStream’s outstanding stock, a 32 percent premium to its 30-day volume weighted average price.The deal gives PepsiCo a new line through which it can reach customers in their homes rather than through stores.
It comes as U.S. grocers are in a state of transformation, with 70 percent of shoppers expected to buy groceries online by 2025, according to Food Marketing Institute and Nielsen. Meantime, retailers are squeezing brands on price and giving increasing shelf-space to upstart and private label brands.
“We get to play in a business — home beverages — where we don’t play,” PepsiCo CFO Hugh Johnston told CNBC.With this move, PepsiCo is doubling down on its drinks business, which has struggled in North America as consumers move away from sugary, carbonated beverages. It also seemingly addresses the challenge that buying new drink brands risks cannibalizing its legacy beverages.
Tel Aviv-based SodaStream makes a machine and refillable cylinders through which users can make their own soda or carbonated water drinks.
PepsiCo has made its own efforts at sparkling water, launching Bubly earlier this year to help fight against LaCroix.
