PURCHASE, NY - PepsiCo rocked the newswires yesterday, as the big-name brand announced it had entered into an agreement with PAI Partners to sell Tropicana, Naked, and other select juice brands in its North American portfolio as well as an irrevocable option to sell certain juice businesses in Europe. Combined, the deal will result in pre-tax cash proceeds of $3.3 billion for the company.
"This joint venture with PAI enables us to realize significant upfront value, whilst providing the focus and resources necessary to drive additional long-term growth for these beloved brands," said PepsiCo Chairman and Chief Executive Officer Ramon Laguarta. "In addition, it will free us to concentrate on our current portfolio of diverse offerings, including growing our portfolio of healthier snacks, zero-calorie beverages, and products like SodaStream, which are focused on being better for people and the planet."
As part of the agreement, PepsiCo will retain a 39 percent non-controlling interest in the newly formed joint venture, according to a press release. PAI, which is a leading private equity firm with experience in the food and beverage sector, will become majority shareholder of the transferred business, with PepsiCo retaining exclusive U.S. distribution rights to the brand in its chilled Direct Store Delivery for small-format and foodservice channels.
The juice brands delivered approximately $3 billion in net revenue in 2020 with operating profit margins that were below PepsiCo’s overall operating margin for the year. The popular company expects to use the proceeds from the sale of the assets to strengthen its balance sheet and make organic investments in business.
"We are delighted to bring these storied beverage brands into the PAI portfolio through another partnership with a leading global food and beverage company. We believe there is great growth potential to be realized through investments in product innovation, expansion into adjacent categories, and enhanced scale in branded juice drinks and other chilled categories," commented Frédéric Stévenin, a Managing Partner at PAI. "We are also thrilled that PepsiCo will remain involved as our partner in the joint venture as we execute our plans to drive the future success of these brands."
Pending customary conditions being met, including works council consultations and regulatory approvals, the transaction is expected to close in late 2021 or early 2022.
With such a sizeable move occurring in this sector, another major player in the super-premium refrigerated juice category, Bolthouse Farms, weighed in on the recent news. 
"Bolthouse Farms welcomes competition as we believe this helps to make healthy, nutritious fresh foods and beverages more accessible and available to more consumers across North America," Bill Levisay, President, shared with me. "We have been an innovation leader in growing and distributing fresh carrots and produce, as well as high-quality, juices, smoothies, beverages, and dressings, for more than 100 years. As a strong, privately-owned Bakersfield, California-based, company, we look forward to continuing as a leader in the produce space, helping make healthy foods and beverages available to a wide range of consumers."
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