Pepsi turns to nutrition as soda-based drinks lose their fizz

With more American dumping carbonated beverages and shifting to healthier alternatives, the cola giants are busy tweaking their product portfolios, primarily by including non-conventional food varieties. PepsiCo Inc. (PEP) recently went the extra mile by creating a new business division, The Hive, exclusively to track the emerging trends in snacking and build brands accordingly.

A few weeks after buying Israel-based carbonation products maker SodaStream, the company struck the first major deal under The Hive initiative to woo its health-conscious customers by catering to their nutritional requirements. Pepsi this week acquired Health Warrior, a super-food company that makes plant-based organic food products and on-trend offerings.

On completion of the transaction, Health Warrior will continue to be headquartered in Richmond, Virginia, headed by co-founder Shane Emmett. Also, the existing employees of the protein bar maker will be retained. Meanwhile, the terms of the deal are not yet known.

Pepsi this week struck the first major deal under The Hive initiative to woo its health-conscious customers, by catering to their nutritional requirements

Health Warrior, which has Wall Street giants like Amazon (AMZN) in its client list, uses nutrient-dense ingredients in its protein powder, mug muffins and the popular nutrition bars made of pumpkin seeds and chia. While marking Pepsi’s entry into the lucrative nutrition bar segment, Health Warrior offers much more in terms of brand variety.

“This will enable us to continue building the Health Warrior brand at a deliberate and sustainable pace and to leverage its entrepreneurial expertise and talent to benefit our broader portfolio,” said PepsiCo North America Nutrition president Seth Kaufman.

The recent developments indicate that going forward the management’s strategy will be to build relatively smaller brands and acquire upstarts with meaningful growth potential.

PepsiCo tops Q3 revenue and earnings estimates; updates outlook

Earlier this year, Pepsi’s arch-rival Coca-Cola (KO) entered into a partnership with a Canada-based company to produce wellness drinks based on cannabis. The deal followed Coca-Cola’s acquisition of the Costa Coffee chain for about $5 billion. The company has been in the diversification mode for quite some time, with a focus on non-traditional items like mineral water and juice.

Pepsi’s shares had a rousing start to the year, hitting a record high in mid-January. Since then, they gained about 2%, all along witnessing several ups and downs. The stock opened Wednesday’s trading sharply lower and remained in the red throughout the session.

Get access to timely and accurate verbatim transcripts that are published within hours of the event