Aug 4, 2021

PepsiCo Sells Popular Brands in PAI Partner’s Joint Venture

PepsiCo
Tropicana
PAIPartners
PrivateEquity
As agreed in the joint venture between PepsiCo and PAI Partners, the company will sell the brands while retaining a percentage of the distribution

PepsiCo owns various food and drinks brands, including Nobby’s Nuts, Walkers, Quaker, Pepsi, Lipton, and Copella. The company will now say goodbye to some of its long-standing brands—Tropicana, Naked and other juice brands in North America, as well as juice brands in Europe—as agreed with a European private equity firm, PAI Partners.

PepsiCo has owned the Tropicana brand since 1998 when it purchased the brand for US$3.3bn. Naked Juice was acquired by the company in 2006 for US$150mn. While the company will no longer own the brands, PepsiCo will hold a 39% non-controlling stake in a newly formed joint venture. PAI Partners—the majority shareholder in the venture—will provide extensive knowledge from the food and beverage industries. PepsiCo will continue to hold the US distribution rights to the brands. 

Frédéric Stévenin, a Managing Partner at PAI, says, ‘We are delighted to bring these storied beverage brands into the PAI portfolio through another partnership with a leading global food and beverage company. We believe there is great growth potential to be realised through investments in product innovation, expansion into adjacent categories, and enhanced scale in branded juice drinks and other chilled categories [...], we are also thrilled that PepsiCo will remain involved as our partner in the joint venture as we execute our plans to drive the future success of these brands’.

Raising Capital for Portfolio Development

The transaction is expected to take place towards the end of 2021 or early in 2022. But, why would PepsiCo sell a range of juice brands that raised US$3bn in net revenue last year? The simple answer is, PepsiCo has future plans for the business and its first port of call is to strengthen its balance sheet before it takes on new, organic investment opportunities.

‘This joint venture with PAI enables us to realise significant upfront value, whilst providing the focus and resources necessary to drive additional long-term growth for these beloved brands’, says Ramon Laguarta PepsiCo Chairman and CEO. ‘In addition, it will free us to concentrate on our current portfolio of diverse offerings, including growing our portfolio of healthier snacks, zero-calorie beverages, and products like SodaStream which are focused on being better for people and the planet’. 

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