M&A

Coke Buys Full Control of Bodyarmor for $5.6B

The acquisition positions Coke to compete with No. 1 Gatorade for dominance of the $8.4 billion sports-drink market.
Matthew HellerNovember 1, 2021

Coca-Cola said Monday it had acquired full ownership of sports drink brand Bodyarmor for $5.6 billion, positioning itself to compete for market dominance with Gatorade.

The acquisition is Coke’s largest to date for a brand, topping its purchase of Costa Coffee for $5.1 billion in 2018. The company acquired the 70% of Bodyarmor it didn’t already own from the brand’s founders and investors including the NBA’s James Harden and MLB’s Mike Trout.

Bodyarmor is currently No. 2 in the sports drink market behind PepsiCo-owned Gatorade, growing at about 50% to drive more than $1.4 billion in retail sales. Coke initially bought a 15% stake in 2018 for $300 million at a $2 billion valuation.

“Bodyarmor has been a great addition to the system lineup over the last three years, and the company has driven continuous innovation in hydration and health-and-wellness products,” Alfredo Rivera, president of Coke’s North America operating unit, said in a news release.

“We’re excited to bring Bodyarmor into The Coca-Cola Company and work with [co-founder] Mike Repole and his leadership team on the next stage of growth,” he added.

As The Wall Street Journal reports, Coke CEO James Quincey “has been pushing the company to become a total beverage company.’ In addition to expanding its coffee and sports-drinks offerings, Coke recently introduced an alcoholic version of its Topo Chico sparkling water.”

Gatorade dominates the $8.4 billion sports-drink market, accounting for 64% of U.S. retail sales in the four weeks ended Oct. 9, according to Goldman Sachs analyst Bonnie Herzog.

But Bodyarmor, which promotes itself as a healthier sports drink, has been growing fast, taking the No. 2 spot from Coke’s Powerade with an 18% share. Sales were about $250 million when Coke first invested in the startup.

Credit Suisse analyst Kaumil Gajrawala said he expects the acquisition will be positive for Coke, citing Body Armor’s brand equity and the potential for Coke to distribute its sports drinks globally, like it did for Monster.

Bodyarmor’s early investors included the late NBA star Kobe Bryant. His estate stands to collect roughly $400 million for its stake, the Journal said.

Justin Sullivan via Getty Images

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