Pepsi plans to sell Tropicana and Naked juice brands for $3.3bn

The buyer, Paris-based PAI, is behind Refresco, the biggest independent bottler of beverages globally.

Tropicana orange juice. Picture: Pat Good

PepsiCo is to sell Tropicana, Naked, and other juice brands to French private equity firm PAI Partners for about $3.3bn (€2.8bn) as it seeks to bolster its balance sheet and focus on healthier snacks and zero-calorie drinks.

The US drinks giant will retain a 39% noncontrolling interest in a new holding company for the brands, and has also granted PAI an irrevocable option to buy certain juice businesses in Europe, according to a statement. 

PepsiCo said it plans to use the proceeds from the deal to invest in the wider business. 

Paris-based PAI is an experienced investor in the food and beverage space and is behind Refresco, the biggest independent bottler of beverages globally. PAI’s proposed joint venture with PepsiCo is similar to one it created when it merged its R&R ice-cream business with large parts of Nestle’s ice cream division to create Froneri.

“This joint venture with PAI enables us to realise significant upfront value, whilst providing the focus and resources necessary to drive additional long-term growth for these beloved brands,” said PepsiCo chairman and chief executive Ramon Laguarta. 

In addition, it will free us to concentrate on our current portfolio of diverse offerings, including growing our portfolio of healthier snacks, zero-calorie beverages, and products like SodaStream which are focused on being better for people and the planet.” 

The PepsiCo juice businesses delivered about $3bn in net revenue in 2020. Chief financial officer Hugh Johnston noted in an interview that the margins for the business are lower than PepsiCo’s average, and so the deal will “incrementally benefit margins”.

He said the juice category had challenges, "and recently as the business gained a little bit of momentum and we started to think about where we wanted to prioritise our efforts". 

Bloomberg