Coke's vitamin infusion
Some things are inevitable. When Glaceau (Energy Brands), the US-based beverage company, started making a business of selling vitamin-enriched water and competing with beverage giants Coke and Pepsi (and Schweppes) for profits and shelf space, it was only matter of time before it would be snapped up by one of them to fill out their extensive line of products. And as it is received as doctrine now, among vendors and gullible customers, that anything labeled as "healthy", no matter how dubious, is worth a solid markup, Glaceau was a prime target. The question is whether the business was just grown for the opportunity to get this big payday from Coke or Pepsi.
Well, the payday has arrived. Coca-Cola announced it would pay $4.1 for the company and its Vitaminwater brand, a leader in the so-called "enhanced water" market. Enhanced water is basically low-calorie Kool-Aid with a few vitamins mixed in, but at an enormous markup. Glaceau has a 30% share in this rapidly growing category, which showed over 50% growth over the last year, and Glaceau has done even better, with shipments having doubled. In the meanwhile, other beverages, including Coke's flagship carbonated beverages, have slipped.
According to Bloomberg, the deal is the biggest acquisition in Coca-Cola history. Coca-Cola also recently bought Fuze Beverage, a UK-based maker of juice, tea and energy drinks, as wells as Brazil-based Leao Junior SA iced tea maker.
India's Tata Group conglomerate, through its Tata Tea division, had bought 30% of the company last year. It stands to double its over $60 million investment through the sale. Tata, with newly deep pockets, is rumored to be on the lookout for new acquisitions, as the cycle goes on.
The move follows what we call the PowerBar model, where a small, brave innovator risks it all on a novel concept, then gets swallowed by a dominant player incapable of real innovation. (Sorry, but Coca-Cola Blak does not qualify.) The lucky entrepreneur and early investors walk away rich, and the big company gets some new products to fill its thirsty pipeline to the shelves.
9:58:13 PM 
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