Analyst Revisits Potential for Coke, WhiteWave Deal

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Longstanding chatter regarding the benefits of a potential merger between Coca-Cola and WhiteWave Foods dates back to 2012, but the conversation has resurfaced with a recent Wells Fargo Securities report highlighting the opportunities of a partnership between the two companies.

Wells Fargo Securities analyst Bonnie Herzog, who authored the report, pointed to WhiteWave’s line of plant-based beverages (PBB) as a “unique growth opportunity” for both companies, adding that “[WhiteWave] has the product and [Coke] has route to market.”

Powered by its Silk brand, WhiteWave markets a range of dairy-alternative beverages, including soy milk, coconut milk and almond milk, the latter of which is the number one product line in the burgeoning category.

Herzog believes that Coke would benefit by acquiring or entering into a distribution partnership with WhiteWave, allowing the company to tap into the quickly growing PBB market, which has thrived amid declining soda sales. WhiteWave, as Herzog put it, would “[gain] access to a world class global distribution network to accelerate its global growth trajectory.”

WhiteWave’s Horizon Organic milk brand could be another enticing line for Coke, as it makes its entry in the dairy market. According to Herzog, Horizon Organic could complement the recently launched FairLife, the Coke-backed, protein-packed premium milk brand, which is set to launch in early 2015.

If not Coke, Herzog believes that PepsiCo or Mexican dairy giants Grupo Lala could also be strong partners for WhiteWave as it looks to expand globally. PepsiCo has been vocal regarding its interest in protein and dairy, and Grupo Lala, with $3.4 billion in annual sales, seeks to expand its distribution in Latin America.

WhiteWave Foods has thrived since it’s spin-off from Dean Foods in May, 2013. Earlier this year, the company acquired Earthbound Farms, the nation’s largest grower of organic produce, in a deal worth approximately $600 million. Last month, WhiteWave announced its third quarter results, reporting a 34 percent increase in revenue as compared to the same period in 2013.