Market Overview

Sports Drink Wars: Coca-Cola Acquires BodyArmor Stake In Challenge To Gatorade

Share:
Sports Drink Wars: Coca-Cola Acquires BodyArmor Stake In Challenge To Gatorade
Related KO
Sink Into Staples ETFs
SunTrust Turns Bullish On Monster Beverage
Dividend Aristocrats NOBL Vs. Achievers VIG, Head To Head - The First 5 Years (Seeking Alpha)
Related PEP
Barron's Picks And Pans: Amazon, Apple, Bristol-Myers, Starbucks And More
Cleveland Fed President: No Reason To Believe Recession In Sight
Should I Be Aiming To Buy Target? - Portfolio January 2019 Update (Seeking Alpha)

The Coca-Cola Co (NYSE: KO)'s Powerade may never been able to match up with PepsiCo, Inc (NASDAQ: PEP)'s Gatorade, but Coca-Cola has a new plan to win the sports drink wars.

What Happened?

Coca-Cola announced Tuesday it has acquired a minority stake in the fast-growing sports drink company BodyArmor, with a path to ownership under defined terms. The terms of the deal were not disclosed.

Why It Matters?

Founded in 2011 by VitaminWater/Smartwater founder Mike Repole, BodyArmor is a fast-growing drink in the category and is expected to hit $400 million in revenue in 2018 — up from $235 million in 2017.

The brand has high-profile minority owners including Kobe Bryant, who has a 10-percent equity stake, and is touted as a healthier alternative to Gatorade and Powerade.

BodyArmor has 2 percent of the sports drink market, while Gatorade has 75 percent and Powerade sits at 15 percent, according to Beverage Digest. 

Whats Next?

At a time when consumers are opting for drinks with less sugar, Coke is searching for alternatives to bolster a healthier drink portfolio.

The brand has shown a committment to acquiring stakes in fast-growing healthier drink alternatives to diversify from the high fructose corn syrup-heavy brands for which it's known. 

Keurig Dr Pepper Inc (NYSE: KDP)'s Dr. Pepper Snapple Group has a 15-percent stake in BodyArmor, but following the close of a merger with Keurig, Wells Fargo analyst Bonnie Herzog said that the newly formed company is not interested in minority stakes. That could create an opportunity for Coca-Cola to acquire an even larger stake in the brand. 

Coca-Cola will likely position BodyArmor "as a premium, isotonic brand above Powerade," Herzog said. 

Related Links:

Stifel Takes Neutral Stance On Newly Merged Keurig Dr Pepper

Coca-Cola CEO Talks Q2 Earnings, Downplays North American Concerns

Latest Ratings for KO

DateFirmActionFromTo
Dec 2018UBSDowngradesBuyNeutral
Oct 2018Morgan StanleyMaintainsEqual-WeightEqual-Weight
Oct 2018JefferiesMaintainsHoldHold

View More Analyst Ratings for KO
View the Latest Analyst Ratings

Posted-In: Beverage Digest BodyArmour Bonnie HerzogAnalyst Color News M&A Top Stories Analyst Ratings Best of Benzinga

 

Related Articles (KO + KDP)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
QTWOKeyBancUpgrades74.0
VIPSKeyBancUpgrades10.0
ADNTRBC CapitalDowngrades16.0
DLPHRBC CapitalDowngrades17.0
MTORRBC CapitalDowngrades19.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Preview: China Rapid Finance Q2 Earnings

Pointer Telocation's Q2 Earnings Preview