PepsiCo said it is selling its 70-year-old juice business, including its most famous brand, Tropicana.
The soda and snack giant said Tuesday it will get $3.3 billion for selling a 39 percent stake in its juice business, which includes the Naked brand as well, to a French private equity firm, PAI Partners, which owns ice cream brands and other food businesses.
“This joint venture with PAI enables us to realize significant upfront value, whilst providing the focus and resources necessary to drive additional long-term growth for these beloved brands,” PepsiCo chairman and chief executive, Ramon Laguarta said in a statement.
“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.”
Last year PepsiCo launched a new drink, Driftwell, which helps insomniacs.
PepsiCo will retain exclusive distribution rights to the juice brands. The soda giant said earlier this month that it will raise prices on its chips, sodas and snacks after Labor day as commodities and shipping costs rise.
Sales of orange juice rose last year during the pandemic as more people ate breakfast at home, PepsiCo said, but demand for fruit juices have generally been declining as consumers move away from sugary drinks. These juice businesses delivered approximately $3 billion in net revenue in 2020 with operating profit margins that were below PepsiCo’s overall operating margin in 2020.
Consumption of fruit juices and fruit drinks fell 19 percent to 2.8 billion gallons in 2020 from 3.4 billion in 2011, according to The Wall Street Journal, which cited data from Beverage Marketing Corp. Over the same period, PepsiCo’s sales of those products fell 36 percent to 436 million gallons.
Tropicana is the top refrigerated orange-juice brand in the US, followed by Coca-Cola’s Simply Orange, according to the WSJ.
The transaction is expected to close in late 2021 or early 2022, the companies said.