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PepsiCo, parent company of Tropicana, has agreed to acquire Naked Juice Co., which started out in 1983 with a man who sold home-squeezed juices to Santa Monica, Calif. beachgoers from a backpack filled with ice -- and now has sales of more than $150 million.
Naked Juice has 25 juice products, including Orange Mango Motion, Berry Blast, Strawberry Banana-C and an all-natural protein juice smoothie. The company produces and ships six million bottles of its juices each month.
"The acquisition signals PepsiCo's continued portfolio transformation to growth platforms that address growing consumer health and wellness needs," Pete Brace, spokesman for Tropicana Products North America, told the Bradenton Herald.
Brace said the deal -- the specifics of which were not disclosed -- is pending government approval. Once the acquisition is completed, Naked Juice will continue to operate out of its facility in Azusa, Calif., rather than moving to the Tropicana facility in Bradenton. "We have no immediate plans to combine the facilities," he said.
Lauren Torres, a beverage analyst with HSBC Securities (USA) Inc., said the acquisition makes sense, considering Americans are becoming more health conscious and steering away from carbonated, sugary beverages. "Overall, PepsiCo has been very proactive as far as building out, both on the beverage and the snack side, their 'Better For You' portfolio of products -- a healthier line of products," Torres said. "As consumer trends change and consumer preferences change, people are shifting out of sugared colas into healthier products, be it juice, or tea, or water or sports drinks."
Torres said PepsiCo's health momentum dates to its acquisition of Gatorade through parent company Quaker Oats in 2001. PepsiCo also acquired Stacy's Pita Chips and IZZE Beverages, a line of natural, sparkling fruit juices, which further increased the company's market share of healthy options for consumers.
"We're excited Naked Juice will be joining PepsiCo, a quality organization with world-class marketing and sales teams that will catapult us to the next level," said Monty Sharma, Naked Juice CEO, in an issued statement.
Rick Pensa, owner of Insight Information and Consulting Services in Kennesaw, Ga., which tracks the beverage industry, believes the Naked Juice acquisition will help PepsiCo win big with consumers who have more disposable income.
"I think by and large, the people who are educated, higher demographics, and higher levels of education and higher levels of income, are more cognizant of the health message," Pensa told the Bradenton Herald. "They are the ones going to the gym and they want their beverages to fit into that mold as well."
"These are premium brands. You can charge a premium for them," Torres added. "So when you're in a convenience store or a deli, one 12-ounce bottle for $2.99, or whatever the case may be, that's a great markup. All parties -- the retailer and the supplier-- benefit from that. That's really the price point that you want to play at, rather than selling a 2-liter bottle for 99 cents at the supermarket."