Pepsi guzzles Izze to bolster juice division

PepsiCo has expanded its healthy drinks portfolio by acquiring Colorado-based juice startup Izze Beverages, in a deal believed to be worth about $75 million.

Pepsico North America president and chief executive officer Dawn Hudson said Izze, which makes a range of healthy sparkling juices, would operate as an independent unit and remain in its Boulder headquarters. The move follows Pepsi's 2000 buyout of the Connecticut-based South Beach Beverage Co (SoBe), which operates autonomously and has a range of juices and iced teas aimed at an under-35 demographic.

In a US market where across-the-board soda sales have been stagnant or dwindling, Pepsi's latest acquisition affirms the development of its soda alternatives strategy. Along with other "health" beverages, both Izze and SoBe have reported buoyant sales as initiatives such as the implementation of healthier school vending machines have driven interest in their products. Indeed Pepsi, along with Coca-Cola and Cadbury Schweppes, committed in March to removing sugary sodas from school vending machines in the US by 2010.

Izze drinkers are ?young, healthy, active and incredibly loyal", said Hudson. "We'll give Izze the freedom and autonomy to preserve its identity while we develop the brand and help it grow."

Izze co-founder and chief executive Todd Woloson said, "We've grown this company to the point where it makes a lot of sense to try to take it to next level. This feels like the natural course right now."

Izze sparkling juices are sold in the US, Canada, the Caribbean and the South Pacific. They contain no refined sugars or other artificial ingredients, and come in flavours such pomegranate, pear and blueberry. Izze?s distribution in health channels such as Whole Foods - which have tended to shun Pepsi and other major soda company offerings - was believed to have strongly appealed to Pepsi, sources said. Izze is also sold in Starbucks, SuperTarget and other outlets.

One market analyst noted Pepsi was far ahead of major rival Coca-Cola in developing its non-soda range. "Pepsi's beaten Coke at that game," Matthew Reilly, of Illinois-based analyst Morningstar, told Boulder's Rocky Mountain News. "Coke basically held onto the old view of the world too long."

Izze was established in 2002 and has annual revenue of about $20 million.

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