The front line | Coca-Cola's $5.6 billion acquisition of BodyArmor, and Pepsi Was a bit panicked

On November 1, Coca-Cola announced a $5.6 billion acquisition of sports drink maker Bodyarmor, the largest acquisition in its history. The deal is valued at bodyarmor at about $8 billion.

Founded in New York in 2011 by Mike Repole and Lance Collins, Bodyarmor entered the sports drink market with the positioning of a premium sports drink, "natural", made from coconut water, low sodium and high potassium and other electrolytes, without artificial colors.

But bodyarmor is well known to the public, and it is inseparable from its early investor, Kobe Bryant. Two years after the brand's inception, Bryant invested $5 million, becoming the second largest shareholder of bodyarmor, and later participated in planning and advertising shoots, making the brand famous.

Bodyarmor has also gradually jumped to become the third largest sports drink brand in North America with the largest market share in North America, after Pepsi's gatorade and Coca-Cola's powerade. According to Nielsen, as of February 6, 2021, bodyarmor's U.S. dollar sales increased 43.4 percent year-over-year and now exceed $1 billion.

The company gained the attention of Coca-Cola in 2018, which became the second-largest shareholder after founder Mike Repole by acquiring a 30 percent stake in Bodyarmor.

PepsiCo's gatorade has long occupied the largest share of the North American market since its release in 1965. To compete with Pepsi, Coca-Cola launched powerade in 1992, and although it competed with the gatorade in the early 21st century, it quickly fell into trouble again.

According to Euromonitor's 2020 data, gatorade ranks first in the North American sports drink category with a market share of 67.7%, followed by powerade at 13.7% and bodyarmor at 9.3%.

After the acquisition is completed, it is roughly estimated that Coca-Cola's market share in sports drinks will reach 23%, although the gap with Pepsi Is still obvious, but in the long competition in the sports beverage field, Coca-Cola does not want to concede. Beverage digest analyst Duane Stanford also said that the acquisition may allow Coca-Cola to develop a brand advantage through a differentiated price strategy by relying on the "bodyarmor" of high-end positioning and the "powerade" of low-end positioning.

Coca-Cola CEO James Quincey said in an interview with the Wall Street Journal that Coca-Cola will strive to develop into a "full-category beverage company", and with the increase in demand for sports drinks during the epidemic, a breakthrough in this link is also the key to Coca-Cola's development strategy.

According to fortune business insight data, the global sports drink market size is $26.24 billion in 2020, and the global sports drink market is expected to grow from $27.22 billion in 2021 to $36.35 billion in 2028, with a compound annual growth rate of about 4.2%.

In the fast-growing sports drink market, Coca-Cola's acquisition of bodyarmor comes at a good time to redraw the market quota.

(Editor: Dong Jie)