Coca-Cola buys control of BodyArmor for $5.6 billion

Coca-Cola buys control of BodyArmor for $5.6 billion

By Michael E. Kanell, The Atlanta Journal-Constitution

Troy Warren for CNT #Business

Upstart sports drink brand a distant second to PepsiCo’s Gatorade

Coca-Cola paid $5.6 billion to take full control of sports drink maker BodyArmor, the company’s largest-ever acquisition, the Atlanta-based beverage giant announced Monday.

Coke had owned a 15% stake in BodyArmor since 2018. Coke now fully owns a company with fast-growing revenues as well as celebrity sports investors that include baseball player Mike Trout and basketball stars James Harden and the late Kobe Bryant.

While Coke has a sports drink of its own in Powerade, the market is dominated by Gatorade, which is owned by Coke archrival PepsiCo. BodyArmor, whose revenues reportedly approach $1.5 billion, markets its sports drinks as healthy alternatives without artificial sweeteners, colors or flavors, using coconut water, low sodium and high potassium.

So Coke’s purchase of BodyArmor is a direct challenge to Gatorade’s dominance, said Duane Stanford, editor of Beverage Digest. “Coke can try to sandwich Gatorade between BodyArmor, a more premium brand, and Powerade, which is more of a value brand.”

Gatorade recently had a 64% market share in U.S. sports drinks, according to The Wall Street Journal, citing industry data. Powerade, which represented just 13% of sales, has been eclipsed by BodyArmor, which had 18% of the market, the Journal reported.

Powerade has also suffered from supply issues since the pandemic began and frequently has been unavailable the past several months in metro Atlanta.

“Going after Gatorade’s market share, that’s a tall order, but (BodyArmor) is the kind of brand that can make headway,” said Stanford.

Since 2018, BodyArmor has been produced by bottlers in the vast Coke network, which also has distributed and marketed the drink, helping it grow.

Coca-Cola has made a splash with only a few major acquisitions in the past. The largest previous purchase was the $5.1 billion deal in 2018 to buy Costa Coffee. In 2007, Coke paid $4.1 billion to buy Glaceau, which sells the Vitaminwater and Smartwater brands.

The acquisitions are part of Coke’s strategy to become less dependent on giant soda brands like Sprite, Fanta and its namesake cola as some consumers shy away from traditional, sweetened carbonated drinks. Coke’s stable of other big brands includes Dasani bottled water, Simply fruit juices and Gold Peak tea.

Michael Repole, co-founder of BodyArmor, was also involved in the creation of Glaceau and its sale to Coke.

Kobe Bryant was an early investor in the company and served on its board until he died last year. His estate stands to make several hundred million dollars on the Coke deal.

Among celebrities endorsing BodyArmor are Ronald Acuna Jr., of the Braves, Trae Young of the Atlanta Hawks, musician Carrie Underwood, tennis player Naomi Osaka and soccer star Megan Rapinoe.

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By Troy Warren

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