PepsiCo is selling its juice business in North America, including brands such as Tropicana and Naked Juice, for $3.3 billion to French private equity firm PAI Partners, the company announced today.
The sale comes 23 years after the consumer packaged goods (CPG) giant bought the orange juice brand for nearly $3.3 billion and U.S.-based Naked Juice for $150 million almost a decade later. Under the terms of the deal, PepsiCo will maintain a 39 percent stake in the new joint venture and have exclusive distribution rights in the U.S. market for both brands.
The deal is part of PepsiCo’s effort to simplify its product range, boost its portfolio of healthy snacks and zero-calorie drinks, and improve profitability, PepsiCo’s CEO Chief Executive Officer Ramon Laguarta said.
Pepsico’s juice business generated nearly $3 billion in net revenue in 2020 and its operating profit margins were below the group’s, according to Reuters.
The CPG giant’s move to sell its business follows similar efforts by its top rival, Coca-Cola, which has looked to streamline its portfolio by discontinuing TaB diet soda and Coca-Cola Energy Brands in the U.S. In addition, the company has sold its ZICO coconut water brand.
Meanwhile, Nestle has looked to trim its product range by selling its U.S. ice cream business to a joint venture that is also backed by PAI for $4 billion.
“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 told Reuters.