PepsiCo Buys SodaStream In US$3.2 Billion Deal To Make New Inroads

Wednesday, August 29th, 2018 | 520 Views


PepsiCo acquires SodaStream in an effort to push more healthy alternatives to consumers and give it a stronger foothold in the in-home beverage market, say analysts at Well Fargo. The deal is expected to close by January 2019, according to Ramon Laguarta, CEO-Elect and President at PepsiCo, SodaStream. He notes about this acquisition: “…[it] add[s] to our growing water portfolio, while catalysing our ability to offer personalised in-home beverage solutions around the world.”

With this move, PepsiCo is doubling down on its drinks business, as consumers move away from sugary, carbonated beverages. SodaStream, gets to expand its distribution through PepsiCo’s global footprint. It now reaches 80,000 individual retail stores across 45 countries with largest markets are Germany, France, Canada and the U.S.

The company helped create the market for in-home soda making, but in recent years, it has promoted the product as a tool to make carbonated water, accommodating changing tastes.

SodaStream reported quarterly earnings that tripled its earnings forecast for the year, and the news sent the company’s shares up more than 26 percent. Machines sales rose 22 percent in the quarter, to more than 1 million, while sales of gas refill units grew 17 percent, to a record 9.7 million.

Prior to the deal’s announcement, SodaStream’s shares had gained nearly 85 percent this year. SodaStream is seen as a healthier and trendier alternative to sugary beverages, as consumers get hooked on sparkling water and this gains ground as the new `it’ drink.

 

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