Keurig Dr Pepper announced that it would buy CORE Nutrition for $525 million by the end of the year. The company would acquire CORE Organic and CORE Hydration, but Keurig Dr Pepper (KDP) has already been managing most of CORE’s distribution for several years. The move shows that once again beverage companies are interested in diversifying their portfolios beyond sugary sodas to appeal to more consumers.
When you examine CORE’s portfolio, it is clear why KDP decided to acquire it for $525 million. CORE Hydration is nutrient-enhanced bottled water available in five different sizes. It has added electrolytes and minerals but does not contain fluoride, chlorine or other chemicals. The company explains that the water goes through a seven-stage purification process, and the plastic bottles do not have BPA. CORE Hydration’s marketing targets athletes and health-conscious adults, and it makes sense for KDP to want to expand to this consumer base, which is usually not interested in buying its sodas.
CORE Organic is a USDA-certified drink that is available in eight flavors including watermelon lemonade, cherry berry lime, orange mango, tropical coconut, pomegranate blue acai, strawberry banana, wild blueberry and peach mango. It has five calories per serving and one gram of sugar. CORE shares that it is also gluten-free, GMO-free and vegan. Again, KDP benefits by acquiring CORE Organic because it targets consumers who want organic drinks without artificial ingredients.
Keurig Dr Pepper has 125 brands, but you can see how CORE fills some important gaps in its large portfolio. Although KDP owns multiple soft drinks, teas, coffees and juices, it lacks an athletic beverage such as CORE Hydration and does not have a similar USDA-certified fruit drink like CORE Organic.
Bob Gamgort, the CEO of Keurig Dr Pepper, says, “CORE has been a valued and successful allied brand partner, and we are pleased that this on-trend beverage will become part of our owned KDP family of brands. Our sales and distribution capabilities have helped fuel significant growth for the CORE portfolio. Through this transaction we intend to realize the full growth potential for the business.”
More consumers are turning away from sugary drinks and looking for healthier alternatives. According to the Beverage Industry’s report, 62% of consumers in the U.S. want options that are more natural. This is creating a decline in soda sales while increasing sales of low sugar drinks.
The Beverage Industry explains, “The rise of clean-label, non-GMO, organic and better-for-you products are impacting purchase behaviors across generations. In fact, the Netherlands-based Innova Market Insights notes that savvy consumers making ‘mindful choices’ and seeking ‘lighter enjoyment’ are the Top 2 trends in the beverage marketplace this year.”
The push for all-natural products that do not have GMOs, artificial ingredients or other additives is not stopping. Consumers want drinks that are better for their health and good for the environment at the same time. You can expect to see more acquisitions like this in the future by large beverage brands as they continue to focus on attracting health-conscious shoppers who want better options.
