Coca-Cola, bottler Femsa to acquire Unilever's AdeS for $575M

Dive Brief:

Coca-Cola Co and its largest bottler, Coca-Cola Femsa, have agreed to purchase Unilever's AdeS soy-based beverage business, which has a strong presence in Latin America. The sale is valued at about $575 million.
AdeS, which reported about $284 million in sales last year, will be added to the non-carbonated beverage platformsshared by Coca-Cola Femsa and Coca-Cola in its franchise territories, according to a statement Wednesday.
With this divestiture, Unilever further slims its underperforming food and beverage business.

Dive Insight:

This acquisition is a strong one for Coca-Cola for two main reasons: expansion of its non-carbonated beverage portfolio and solidification of its presence in strategic Latin American markets.

While carbonated beverage sales were flat worldwide,non-carbonated beverages grew 7% in the latest quarter．As demand for soda wanes in major global markets, including the U.S., Coca-Cola has focused on diversifying beyond soda, expanding its portfolio with acquisitions and stakes in brands like Monster energy drinks, Suja juices, and Fairlife milk. Coca-Cola'sVenturing and Emerging Brands (VEB) segmenthas been crucial to this non-carbonated portfolio growth.

Coca-Cola is also depending on solidifying its presence in emerging markets. For soda companies in general, those markets includeLatin America, where growth prospects for soda have been brighterthan others, according to Euromonitor. Internatonally, Coca-Cola bought a 40% stake in Nigerianjuice maker Chi Ltd earlier this year, and itacquiredmulti-grain drinks maker China Culiangwang Beverages Holdings Ltd去年。

With this latest acquisition, Coca-Cola can capitalize on its strong position in the market while inspiring growth in a new, non-carbonated beverage market segment, further spreading its beverage dominance in this region.

AdeS is the latest brand to hit the chopping block for Unilever, following divestments of brands like Slim-Fast diet products, Ragu tomato sauces, and Bifi meat snacks.

Still, Unilever's food businessgrew 1.9% in the latest reported quarter．That was driven primarily by 3.8% underlying sales growth for the refreshment business, which has benefited fromhigher-margin premium ice cream productsand innovations innon-dairy ice creamsand a more snack-friendly ice cream sandwich line under its Ben & Jerry's brand.