PepsiCo buys SodaStream for £2.5bn as it looks for ways to reach consumers ‘beyond the bottle’

Pepsi is buying the carbonated water company as part of its plan to branch into purpose-driven healthy alternatives to fizzy drinks.

SodaStream

PepsiCo is buying carbonated drink company SodaStream in a $3.2bn (£2.5bn) deal that aims to reduce Pepsi’s reliance on its signature fizzy drink, as well as push its environmental credentials.

PepsiCo has agreed to pay $144 per share in cash for the Israeli company, 11% up on its closing share price on Friday (17 August), after better-than-expected results from the Israeli company,

SodaStream, which claims it is the largest sparkling water brand in the world, provides machines that enable consumers to make their own fizzy drinks or flavoured waters – meaning there is less need to buy bottles of drink.

PepsiCo chairman and CEO Indra Nooyi says: “PepsiCo and SodaStream are an inspired match. Daniel [Birnbaum, CEO] and his leadership team have built an extraordinary company that is offering consumers the ability to make great-tasting beverages while reducing the amount of waste generated.

READ MORE: SodaStream CEO on why marketing is key as it aims for ‘cult’ brand status

“That focus is well-aligned with Performance with Purpose, our philosophy of making more nutritious products while limiting our environmental footprint. Together, we can advance our shared vision of a healthier, more-sustainable planet.”

Nooyi is stepping down from the top job at PepsiCo later this year, but the move shows that Pepsi’s CEO-elect, Ramon Laguarta, will continue focusing on healthier alternatives.

He adds: “SodaStream is highly complementary and incremental to our business, adding to our growing water portfolio, while catalysing our ability to offer personalised in-home beverage solutions around the world.

“From breakthrough innovations like Drinkfinity to beverage dispensing technologies like Spire for foodservice and Aquafina water stations for workplaces and colleges, PepsiCo is finding new ways to reach consumers beyond the bottle, and today’s announcement is fully in line with that strategy.

In March, PepsiCo launched squash drink Drinfinity aimed at health-conscious millennials. The ecommerce-only brand was fostered as a startup but the drinks giant has high hopes for it’s reach after launching it in Brazil, the US, the UK and Europe.

Daniel Birnbaum, SodaStream CEO, adds: “Today marks an important milestone in the SodaStream journey. It is validation of our mission to bring healthy, convenient and environmentally-friendly beverage solutions to consumers around the world.
We are honoured to be chosen as PepsiCo’s beachhead for at home preparation to empower consumers around the world with additional choices.”

Last year, SodaStream told Marketing Week it wanted to create a “cult brand” and was exploring expanding into the beer market. The deal will give the brand access to PepsiCo’s distribution capabilities, global reach, R&D, design and marketing expertise with the aim of fuelling expansion and innovation.

Melanie Felgate, senior consumer insights analyst at data and analytics company GlobalData says: “SodaStream allows consumers to customize their own beverages to create not only flavors – but potentially sugar levels – to suit their needs, helping PepsiCo better meet consumer’s needs for products which are not only healthier but do not compromise on taste.

‘‘Furthermore as the environmental burden of plastic waste comes to the fore, the concept can also tackle this by reducing reliance on plastic bottles. This is likely to attract the 35% of consumers globally surveyed by GlobalData in Q3 2018 who claim they would buy more of specific types of products if they were “packaged without any plastic at all.”

The deal is expected to go through by January 2019 after approval by SodaStream shareholders but the deal has been unanimously approved by the directors of both companies.

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