Pepsi invests in UK aquaceuticals

By Shane Starling

- Last updated on GMT

Related tags: Pepsico

PepsiCo has beefed up its presence in the European functional
waters market by acquiring three-year-old UK start-up V Water for
an undisclosed fee.

The V Water range comes in six flavours and includes functional ingredients such as vitamin C, zinc and ginseng. Pepsi's move comes amid flatlining sales for the traditional carbonated beverages sector worldwide. Some analysts predict the soda industry is unlikely to recover anything like its former status as consumers shift preferences to alternatives such as energy drinks and functional waters and juices. Pepsi and Coca-Cola have been buying up beverage companies, particularly in the US, as they seek to garner some of this shifting market share. In one of the biggest acquisitions, Coca-Cola last year bought rising 'near water' player Glacaeu Vitaminwater for about $4bn. Pepsi's UK investment may have been prompted by Coca-Cola's intention to launch Vitaminwater in the UK along with other European markets this year. "While we estimate that the acquisition is immaterial to Pepsi's financials and will likely prove immaterial to Coke's global growth, the move does raise the risk of hydration wars on a global scale,"​ wrote Morgan Stanley analyst William Pecoriello. Glaceau's director of international communications, Nina Fiddian-Green, said Vitaminwater was slated for a summer launch in London. Coca-Cola took Vitaminwater outside North America for the first time this year, launching the product in Australia. Like V Water, Vitaminwater's many-flavoured varieties contain a cocktail of vitamins and minerals as well as functional ingredients such as rose hip, guarana, chamomile, taurine, ginkgo biloba, gotu kola and Siberian ginseng. Pepsi, whose brands include SoBe Life Water, Gatorade and Aquafina, will use its UK bottler and distributor, Britvic, to manufacture, sell and distribute V Water in Britain. "V Water provides us with a strong platform for expansion into a fast-growing market and reflects PepsiCo's global commitment to transforming our portfolio of products and extending our range of healthier beverages,"​ said PepsiCo UK and Ireland general manager Garrett Quigley. The two founders of V Water, Walter Faulstroh and Chris Coleridge, said: "V Water has positioned itself in the UK market as 'The Vitamin Water' since 2005. Joining V Water's exciting brand and people to the powerful PepsiCo family will allow us to continue to expand and fulfil the full potential of V Water. We are very excited to be leading the expansion of the value-added water category in the UK."​Recent PepsiCo acquisitions include US-based healthy juice company, Naked Juice, Russian juice company, Lebedyansky, and juice maker Sandora in the Ukraine.

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