Major brands like Tropicana are leaving Pepsi’s portfolio.
Major drink and snack brand PepsiCo announced today that they will be selling off several of its North American-based juice brands, the most prominent of which being major juice producer Tropicana. According to a Reuters report, PepsiCo will be selling the brand to French private equity firm PAI Partners for a $3.3 billion price tag.
PepsiCo is making this move as it works to streamline its product lines and move away from the sugary beverages of yesteryear. According to CEO Ramon Laguarta, the money made from the sale will go toward the development of health-centric snacks and zero-calorie beverages, brands that are steadily becoming more profitable as the consuming public becomes more health-conscious. They’re also looking to save money by keeping more of their product development in-house. This is a move several other major snack companies have made; Coca-Cola Co. cancelled their TaB soda and Coca-Cola Energy brands for the same reason, while funneling more time and money into products like ZICO coconut water.
PepsiCo is selling Tropicana and other juice brands for $3.3B.
"We came to the conclusion that given our orientation towards higher growth and improving our margins, Tropicana was probably less a fit with the portfolio than it was before," CFO Hugh Johnston says. pic.twitter.com/piQ5wzCkHS
— Yahoo Finance (@YahooFinance) August 3, 2021
“Companies are finding it difficult to provide effective marketing support behind an infinite number of brands that often compete for very similar occasions,” Rabobank Food and Beverage analyst Stephen Rannekleiv said in May.
PepsiCo has owned Tropicana since 1998, originally purchasing it for the same $3.3 billion that they’re selling it for now. While they will no longer be the majority stakeholder in the juice brand, they will maintain ownership over a small percentage of it in a joint venture. US distribution rights on Tropicana juices will also still be handled exclusively by PepsiCo.