Nick Webb of The Irish Independent writes that Kilkenny-based Glanbia, an international nutrition and cheese company, is amid a three-way shootout to buy Cytosport, Inc., the company that produces Muscle Milk, for about $500 million. Webb writes that Glanbia is said to be facing competition from dairy-ingredients firm Whitewave Foods and NBTY, a manufacturer of vitamins and nutritional supplements.
The price tag for Cytosport mirrors the figure that the owners and private equity firm TSG Consumer Partners, LLC, hoped to draw when they first announced Cytosport’s availability via auction. It also trumps Glanbia’s sales of approximately $300 million.
The interest from Glanbia, a dairy products company more commonly associated with American cheese than protein drinks, depicts the company’s willingness to develop a more comprehensive portfolio.
“Glanbia has invested heavily in building up its presence in the fast-growing sports nutrition market as it taps into demand from gym-goers, sports players and bodybuilders for protein supplements,” Webb writes.
As Glanbia hopes to broaden its offerings, a Forbes article suggests that Dr Pepper Snapple Group (DPSG) should do much of the same. The article, titled “Dr Pepper Could Lose The Non-Carbonated Beverages Battle in North America,” argues that DPSG has focused most of its investments in the carbonated soft drink (CSD) category. Behind The Coca-Cola Co., Inc., and PepsiCo, Inc., DPSG holds a market share of about 17 percent in the U.S. However, Forbes estimates that DPSG’s non-carbonated beverage division contributes only about 20 percent of the company’s value.
“In the fast growing segments such as bottled water and energy drinks, the company has a limited presence,” the article notes. “As the market slowly shifts from fizzy to non-fizzy drinks, Dr Pepper Snapple will have to further penetrate the [non-carbonated beverage] market in order to maintain its market share in the beverage industry.”
The article notes that, behind CSDs, bottled water is the second-largest category of beverages in the U.S. in regards to dollar sales volume. In 2012, the bottled water market was worth $11.8 billion, which represents a 6.7 percent increase from year-to-year. While Coke and Pepsi haven’t reached the level of Nestle Waters North America, which offers Pure Life and Poland Spring, Coke’s Dasani and Pepsi’s Aquafina easily top DPSG’s Deja Blue in sales.
The article also studies sports and energy drinks, which it notes as the fastest growing category in the beverage industry. After growing by 12 percent in 2011 and 11 percent in 2012, the category’s revenues have spiked to $16 billion. Red Bull, Monster and Rockstar hold more than 90 percent of the energy drink market share. As for sports drinks, Pepsi’s Gatorade and G2 held a share of about 75 percent in 2011, followed by Coke’s Powerade at more than 20 percent. DPSG failed with its 2007 launch of Accelerade, a ready-to-drink sports beverage, and Venom, an energy drink with dramatic packaging, has never caught on.
“In order to solidify its bid in the [non-carbonated beverage] market in the coming years, the company will have to invest heavily in the marketing and developing of its brands in these fast emerging segments,” the article notes.
Pepsi’s success in the sports drink market isn’t the company’s only foray into a growing category. Last Thursday, Buffalo Wild Wings, Inc. announced that Pepsi will replace Coke as the restaurant’s primary soft drink and non-carbonated beverage provider.
Anticipating the deal before its announcement, Stephanie Strom of The New York Times writes that the partnership represents the biggest sign so far that PepsiCo is taking advantage of its successful snacks business.
“You’ve got to get in the door with great beverages,” Kirk Tanner, president of PepsiCo’s food service business, said in the article. “But what this partnership does is give Buffalo Wild Wings a full access pass to all that PepsiCo has to offer.”
Doritos Locos Tacos, a collaboration between PepsiCo and Taco Bell, has totaled more than $1 billion in sales as of this fall, the article notes. Up next, Buffalo Wild Wings visitors could soon be offered Doritos wings or Mountain Dew cocktails.
The deal could also allow Buffalo Wild Wings to benefit from PepsiCo’s relationships with the National Football League and Major League Baseball and for both companies to further engage consumers through fantasy football.
Strom points out that Mountain Dew guzzlers — the “bros” of the world — will easily mesh with the partnership.
“The clientele of Buffalo Wild Wings…fits rather neatly with some of PepsiCo’s products,” Strom writes.
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