Big Red, the Austin, TX-based producer of CSDs and other beverages, announced Tuesday that it acquired HyDrive Energy, the Rye, NY-based company that markets low-calorie energy drinks and a zero-calorie energy powder drink mix under the slogan “Energy Done Better.”
Gary Smith, the CEO of Big Red, said that for years he has followed the progress of energy drink hybrids with coffee, tea and juice. One specific category, to him, seemed to match his desire for a healthy option with room to grow.
“We’ve always kept a close eye on enhanced waters and feel like a lighter, lower-calorie energy water or enhanced water plays a better play,” Smith said.
“If you read the tea leaves, that’s really what’s happening,” said Brian O’Byrne, CEO of HyDrive. “Everybody, I think, is looking for ‘healthier’ or ‘better for you,’ or ‘lower calorie.’”
Big Red, a maker of products ranging from natural, Stevia sweetened SANS sodas to Big Jak energy drinks, doesn’t plan on rethinking its business model with this acquisition. Smith referred to Big Red as a “total portfolio beverage company.”
“While it’s a seat at the table for healthy drinks and healthy energy,” he said, “it’s definitely not a mindset shift in our company away from CSDs.”
Smith said that he doesn’t believe “the Whole Foods shopper” is going to replace “the public shopper.”
“I have a lot of buddies in this business and they all scramble and clamor for this Trader Joe’s, Whole Foods shopper,” he said. “We sell more product in a Publix lobby or an HEB lobby over the weekend than they’ll sell in a Whole Foods store for the year.”
Regardless, he couldn’t ignore the potential of enhanced water as a strong addition to his company’s portfolio. Smith said that he was attracted to HyDrive because of its solid footing in the category since 2006, considerable volume, loyal following and well established distribution system with the Dr Pepper Snapple group (DPS).
O’Byrne said that Big Red and HyDrive, both partly owned and distributed by DPS, had an undeniable synergy even before striking a deal. He feels that HyDrive could benefit from Big Red’s strong presence with retail giants Walmart and Kroger.
“They are huge in Texas, we’re small in Texas. We’re big in the plains, they’re small in the plains,” O’Byrne said.
When BevNET contacted HyDrive Chairman Mike Weinstein, he said he couldn’t comment on the acquisition because he still holds a seat on the DPS board. O’Byrne said that Weinstein will leave the board on Dec. 31, but until then, will not conflict interests.
Smith and O’Byrne declined to reveal the cost of the acquisition.