Coca Cola is in talks to take over Odwalla, a leading California based juice company. Having fallen behind key rival PepsiCo in the acquisition game, the world’s largest soft drink company is fighting back. Through acquiring Odwalla, Coca-Cola will gain a slice of the rapidly growing non-carbonated soft drink market, as well as access to alternative distribution channels.

However, Coke will still be left with a great deal of catching up to do.

In the face of flat soda sales, carbonated drinks manufacturers continue to look to non-carbonated beverages for growth. Buying Odwalla would be a good move for Coca-Cola, which has found itself eclipsed by deals involving rivals over the past 12 months. While the Atlanta based drinks manufacturer has added Mad River Traders and Planet Java to its portfolio, it has been continually missing out on the really juicy targets. Cadbury Schweppes has acquired ice tea producer Snapple, while PepsiCo has acquired SoBe, and through its acquisition of Quaker Oats, the world’s number one sports drink, Gatorade.

Odwalla, based in Half Moon Bay, California, sells a range of fresh fruit and vegetable juices, fortified juices and smoothies. Among its other products are spring water, soy shakes and food bars. Since May 2000 Odwalla has also owned Fresh Samantha juices. Given Odwalla’s traditional strength on the West Coast, the merger with the Maine-based juice producer was the perfect compliment, giving it a presence in the East Coast market. This national presence will have made Odwalla a more attractive target for Coca-Cola.

The company’s products are sold through over 8,000 mainly US based retail outlets, including supermarkets, natural food stores, and convenience stores. In addition to gaining a range of established juice products, gaining control of Odwalla’s distribution network would be an additional plus point for Coca-Cola, extending to outlets such as natural food stores that were previously beyond the reach of the soft drinks giant.

Coca-Cola already owns the juice brand Minute Maid, although Minute Maid has been performing poorly recently in the face of stiff competition from PepsiCo’s Tropicana. It may be presented with an additional opportunity in the juice sector, if as is expected, Ocean Spray sells its Nantucket Nectars juice drinks line. Coca Cola should firmly grasp any such opportunities with
both hands, if it is to catch up with its rivals in the non-carbonated market.

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