- Coca-Cola is taking a majority stake in sports beverage brand BodyArmor.
- It marks the soda giant’s first acquisition since it cut brands and laid off employees last year.
- The sports drink market is lucrative for Coke, and BodyArmor is a chance for it to challenge PepsiCo’s Gatorade.
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Coca-Cola is upping its sports drink game.
The beverage giant said Friday that it would raise its stake in BodyArmor to majority ownership from a minority position. That makes the brand Coke’s first acquisition since cuts last year, including a decision to cast off 200 brands, including Zico coconut water.
The deal was first reported by Beverage Digest based on a notice that Coca-Cola filed with the Federal Trade Commission. Coca-Cola did not immediately respond to a request for comment.
BodyArmor gives Coca-Cola another tool to expand sports drink sales, which are dominated by PepsiCo’s Gatorade. As of 2019, Gatorade commanded 72% of US sports drink sales, while Powerade, owned by Coke, took just 16%, according to Euromonitor. Sales in the sports drink market are $7 billion annually in the US, according to research firm IRI.
Both Coke and Pepsi have come out with new versions of their sports drinks, such as low-calorie Powerade or Propel water with immune-supporting ingredients, in order to appeal to consumers’ health sensibilities.
BodyArmor, meanwhile, prides itself on using more natural ingredients, including coconut water. Though small compared to Gatorade and Powerade, the brand has attracted investments from professional athletes including Andrew Luck and the late Kobe Bryant.
Coke first invested in BodyArmor in 2018, when the brand got access to the company’s bottling network as part of Coke’s Venturing and Emerging Brands arm. Its other investments include Honest Tea, Hubert’s lemonade, as well as Health-Ade kombucha.
The new BodyArmor deal comes a few months after Coke cut 200 brands and refocus its portfolio around “brands that prioritize scale in an effort to accelerate growth,” a company spokesman said at the time. The cuts included Zico coconut water, a brand that Coke acquired in full in 2013 and was hailed at the time as a trendy new beverage with health benefits.
Venturing and Emerging Brands, the arm of Coke that BodyArmor joined under its initial 2018 deal, is the unit of the company charged with investing in and growing small brands. Zico founder Mark Rampolla bought back the brand again last month through PowerPlant Ventures.
At the time, Rampolla told Insider that he believed Coke had not done enough to grow Zico. He also pointed to frequent leadership changes at the venture arm as one of the factors that held Zico back.
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