Coke Acquisitions: Mad River vs FUZE?!?!?
posted by John Craven at 3:09 PM
As Coke gets ready to bring FUZE into the picture, there’s been some talk – at least among those who cover the industry -- about whether or not Coke could botch this the way they botched the Mad River acquisition.
I am honestly somewhat surprised that this comparison is even considered given that:
I am honestly somewhat surprised that this comparison is even considered given that:
a) FUZE's sale price (supposedly around $200 million) is much greater than Mad River’s was (~$7 million). Spending $7 million to knock off a potential competitor is easy. Spending $200 million is a much bigger hit, and would create more of a pyrrhic victory, even if the destruction of Fuze is Coke’s real intent.
b) Coke immediately scrapped Mad's CSD’s, which were really its better product line. This reinforces the thought that Coke was just out for blood. And even if they weren’t, and they just had too much arrogant faith in their own flagship CSD’s, there’s this:
c) FUZE has a much stronger portfolio and is positioned in growth categories… it doesn’t really have any CSD’s, let alone CSD’s in glass bottles, for Coke to kill off.
Your thoughts?
Your thoughts?
8 Comments:
I don’t believe Coke was considering Fuze competition but it would not prevent them from destroying it even without a plan.
It’s part of their innovation strategy…
I work for a distributor that sells Fuze in Michigan. Coke will screw it up. Coke and Pepsi throw money around because they can't come up with any good products of there own. They realize new age beverages are what people are buying.
as a distributor of Fuze, I have not seen a product take off in the Market since snapples introduction. Unfortunately I beleive that Fuze will end up following the trends of snapple. As a small beverage company we were able to dedicate resources and attention to a brand that will now be lost in the shuffle. And we will find the next great item to replace the brand, just as we did with the Hansens brand.
It is too bad where the beverage industry is going (i.e. in the same path as US banks, malt bevs, etc). The big fish are swallowing up the small ones, leaving very little room for entrepreneurship. The only wqay to survive is to have a very successful LOCAL brand that red and blue do not care about. I can think of 2 brands at the current time that are surviving this epidemic. Glaceau and Hansen's (which is under SEC scrutiny for illegal activity).
remember NAYA
The fact that Coke purchased Fuze is not the surprise, the fact they paid a reported $200M for it is! This is a company that had gross sales of aprox. $90M and most likely generated an EBITDA of around $5M - $6M even at 10X earnings, that's only $60 - $70M! It's a joke - like Dot Com all over again. As far as another posters comment about having a local brand that red and blue doesn't care about - what the heck kind of stupid statement is that? Ask Lance Collins (founder of Fuze) if he's happy that Coke came a courting!
I agree it is great for Mr. Lance Collins. However, it is not so great for competition, FUZE employees (and their families) that will soon be looking for work, FUZE supply chain that will now be incorporated into Coke's system. Another brand bites the dust being eaten up by red/blue. There is a bigger picture here outside of how much 1 person pocketed. But cheers to Lance.
My daughter's best friend is an intern at Fuze and she says that Coke hasnt changed things or people. She also said that she got to participate in tasting some new drinks with Mr. Collins and other employees just like when she was there last year. Who knows what these companies are thinking...but they better not screw up my Strawberry Melon flavor!
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