Coke has finalized its purchase of Zico coconut water, purchasing the remaining outstanding shares. The purchase amount has not yet been disclosed. An official announcement is expected from the company later today.
Zico is the second-largest coconut water brand in the U.S. and is the second to be purchased by a major strategic. PepsiCo closed on its acquisition of O.N.E. in 2010, folding the brand into its Naked Emerging Brands group. Zico was purchased through Coke’s Venturing and Emerging Brands Group (VEB).
Founder and current CEO Mark Rampolla will be moving into a role of non-executive advisor during the transition; G. Scott Uzzell will become President, rejoining Coke a year after he left VEB to become Zico’s Chief Commercial Officer and EVP of Sales.
While Coke has gradually bought out the company’s investors, assuming a majority stake in April of 2012 after buying into the company in 2009, the final deal took months to work out. As with VEB’s deal with Honest Tea, there were sales figures that needed to be met to trigger the final transaction amount.
Zico’s total sales over the past 12 months were at $37 million as of Oct. 6, according to grocery, club, drug, warehouse, and other channels channels covered by IRI, a Chicago-based market research firm. The brand also has a strong presence in hard-to-win specialty retailer Trader Joe’s, as well as numerous foodservice and “up-and-down-the-street” accounts.
While the company has grown in significant ways since the initial Coke investment, it still lags far behind first place brand Vita Coco, which has built strong national distribution in a partnership with Dr Pepper Snapple Group’s distribution apparatus.
Still, Zico has Coke’s own distribution system as its ace in the hole, and it has been gradually shifting of onto Coke trucks outside of New York, where it is distributed by independent powerhouse Big Geyser.
That distribution can be a curse as well as a blessing, however – while independent brands like Vita Coco have become a significant part of the DPSG network, they remain a smaller presence for Coke, even though the company has a designated VC operation in Venturing and Emerging Brands.
Still, the VEB organization is trying to change that – it recently appointed veteran sales leader Chuck Muth to lead a combined VEB sales organization, tasking him with developing the various VEB enterprises’ different sales teams capabilities around selling the entire VEB portfolio, not just their own brand.
Up until now, Muth’s job description has only included VEB’s fully owned properties, Honest Tea and Illy; with Zico now wholly owned by the organization, it seems likely that his sales force will have another card in the deck.
Have news? Have a new product? Tell us