A cold can of Coca-Cola (KO) might not be the first thing you’d want to drink before a run, but that doesn’t mean Coke can’t expand its holdings within the sports drinks category. With the energy drinks market valued at $100b in 2020, the acquisition comes as a smart move.
The company announced that it had acquired the sports drink maker Bodyarmor for $5.6b. Bodyarmor was already under Coke’s wings when the company bought a 15% stake in the brand in 2018, but a full-control acquisition now increases Coca-Cola’s market share in the sports drink segment. It comes in as the company’s largest acquisition to date and an attempt to dethrone PepsiCo’s Gatorade.
Bodyarmor isn’t a bad shout as the company is estimated to see a 50% increase in its sales this year, reaching $1.4b. The acquisition is set to be a two-way relationship as Bodyarmor’s CEO plans to also help out with Coca-Cola’s ancillary beverages such as Smartwater, Vitaminwater, and Energy Brands.
why it matters
Since the pandemic hit, Coke’s been trying to shake things up by selling off poorly-performing brands and expanding its portfolio. Coke stock has been up by 1.0% over the past five days.