(Adds Pepsi comment in paragraph 5)
By Lauren Hirsch
Oct 13 PepsiCo Inc is nearing a deal to
acquire sparkling probiotic U.S. drinks company KeVita Inc,
people familiar with the matter said on Thursday, in the latest
push by the carbonated beverage giant to diversify its soft
The deal would be PepsiCo's first outright acquisition
through its venture arm dubbed Naked Emerging Brands, whose
mission is to expand the company's portfolio of sugary drinks by
developing brands that appeal to health-conscious consumers.
PepsiCo already owns a minority stake in KeVita, and has a
distribution agreement with the Oxnard, California-based
company, the people said.
The acquisition of KeVita could be finalized as early as
this month, and will likely value the privately held company at
less than $500 million, the people said. There is always a
possibility that the negotiations end unsuccessfully, the people
The sources asked not to be identified because the
negotiations are confidential. A spokesperson for Pepsi said
that the company does not comment on "rumor or speculation."
KeVita could not be immediately reached for comment.
Carbonated beverages sales have softened in recent years, as
consumers seek calorie-free alternatives to sugary drinks.
Several U.S. cities have introduced a so-called 'soda tax' on
sugary drinks, or are seeking to do so.
KeVita sells drinks that include sparkling probiotics,
master brew kombucha tea, and vinegar tonics. Probiotics,
proponents say, help aid digestive and immune health.
KeVita was founded in 2010 by Chakra Earthsong, a
nutritional consultant, and her friend, entrepreneur Bill Moses.
They combined Earthsong's at-home water kefir ferment with
Moses's winemaking fermentation knowledge.
The company has also received investments from private
equity firms KarpReilly LLC and SPK Capital LLC.
Early minority investments in companies such as KeVita allow
PepsiCo and rival Coca-Cola Co to familiarize themselves
with a startup before buying it outright, as only a small
percentage of new drink concepts take off. These investments
also usually come with distribution agreements, which allow the
bulging brands to grow.
When these startups find their footing and prove their
business plan, they will often consider selling outright.
Earlier this month, Reuters reported that antioxidant
beverage company Bai Brands LLC, in which Dr Pepper Snapple
Group Inc owns a minority stake, is exploring a sale
that it hopes will value it at more than $2 billion.
PepsiCo's existing healthier offerings include Naked Juice
and O.N.E Coconut Waters.
(Reporting by Lauren Hirsch in New York; Editing by Bernard