PepsiCo has entered into an agreement with PAI Partners (PAI) to sell Tropicana, Naked and other select juice brands across North America, and an irrevocable option to sell certain juice businesses in Europe.
PAI will pay $3.3bn to own 61 per cent stake in a newly formed joint venture to have brand rights for the juices, alongside PepsiCo owning the remaining 39 per cent and retain exclusive U.S. distribution rights.
The private equity firm has strong experience in the food and beverage space and has previously invested in Froneri, Addo and Ecotone.
“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 CEO Ramon Laguarta said.
“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.”
PAI managing partner Frédéric Stévenin added: “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 realized through investments in product innovation, expansion into adjacent categories, and enhanced scale in branded juice drinks and other chilled categories.”
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.
The company also expects to use the proceeds from the sale of these assets primarily to strengthen its balance sheet and to make organic investments in the business.