Dr Pepper Snapple Gets Bai For $1.7 Billion

Dr Pepper Snapple is buying Hamilton, N.J.-based Bai Brands, purveyor of premium enhanced water in flavors such as Congo Apple Pear, Ipanema Pomegranate and Sumatra Dragonfruit, for $1.7 billion in cash. 

The first case of Bai was sold in August 2009; a deal with Dr Pepper in 2014 has given it national distribution and anticipated sales of about $425 million in 2017, according to the release announcing the deal.

Bai is the Mandarin Chinese word for “pure,” the company says, as well as an acronym for “Botanical Antioxidant Infusions.” And if you’re wondering exactly what a Botanical Antioxidant Infusion might be, there’s a Web page for that. (It involves a “secret superfruit — a.k.a. the coffeefruit,” stevia and more.)



Separately, PepsiCo is acquiring KeVita, the Oxnard, Calif.-based maker of organic probiotic and kombucha beverages, Marketing Daily’s Karlene Lukovitz reports. It has owned a minority interest in the company, which also launched in 2009, for three years.

The acquisitions come even as “the public’s attention on the health effects of sugary sodas has continued to increase, slowing growth and increasing political pressure,” as the New York Times’ Stephanie Strom writes in a piece tracking Big Soda’s “creeping progress” in the concerted effort to reduce calories in their products (and avoid those nettlesome sugary drink taxes).

Strom was among a handful of reporters the American Beverage Association invited to observe what’s been done “to encourage consumption of healthier beverages in three stores in the Bedford-Stuyvesant neighborhood in Brooklyn, one of the 10 sites the companies promised to focus on” in advance of the release of research about their efforts. Concludes Strom: “the findings and observations … suggest that the companies have a long way to go to meet their goal.”

Indeed, the study finds that “U.S. beverage calories per person declined only 0.2% in 2015, a slower rate of decrease than in earlier years,” Mike Esterl and Jennifer Maloney report in the Wall Street Journal. “Calorie reduction momentum has stalled,” the report states.

It also “found that consumers shifting to bottled water previously drank zero-calorie soft drinks, not full-calorie sodas,” Esterl and Maloney write. “Changing behavior isn’t easy,” a PepsiCo spokesperson tells them while Coca-Cola referred questions to the ABA.

But in the grand tradition of “if you can’t beat ’em, buy ’em,” PepsiCo and Dr Pepper have now acquired two of the fastest-growing alternative beverage companies.

“Bai could grow even faster next year with the help of its new spokesman, Justin Timberlake,” points out Hayley Peterson for Business Insider. “Timberlake is joining the Bai team as an investor and its first chief flavor officer, the company announced last month. He will also star as the face of the brand in a $100 million marketing campaign that Bai is launching next year.”

Founded by Ben Weiss, a “coffee entrepreneur” who will continue to lead the company, Bai Brands was named one of Inc.'s 500 fastest-growing private companies in 2014 and one of America’s 20 Most Promising Companies by Forbes in 2015.

“A key driver behind Bai’s remarkable development is the all-star leadership team that Weiss assembled to help grow the company. It includes President Ken Kurtz, CFO Ari Soroken, COO Barak Bar-Cohen, Chief Creative Officer Chad Portas and former Panera Bread executive Michael Simon, who joined Bai in 2015 as its Chief Marketing Officer. And … the company tapped another industry expert, Nestlé Waters’ Mike Pengue, as its new Chief Strategy Officer,” Monica Wang wrote in a July profile of the company for Forbes

Wang’s story ledes with a recap of Bai’s Super Bowl commercial in February in which “an irreverent man in gold chains, earrings and a beanie” says: “Yo, some people think it don’t make sense that I’m a horse whisperer,” he says. “But you know what else don’t make sense? Bai. I mean, it’s good for you, but still somehow tastes amazing.”

Meanwhile, “the acquisition represents a strategic shift by Dr Pepper Snapple, which has shied away from outright acquisitions since being spun off by Cadbury PLC in 2008. The company increasingly has relied for growth on its expanding stable of brands that it distributes but doesn’t own, including Fiji bottled water and Vita Coco coconut water,” report Esterl and Maloney in a separate story in the WSJ.

As for the current corporate structure at Bai, it’s rather unique.

“Every one of us reports directly to your tastebuds,” according to Bai’s Web site. “We don’t work for anybody. We work for your body. Our customers are our board of directors. You are our most important priority and the focus of all our energy. You are our inspiration.”

Exactly what share of the $1.7 billion your tastebuds will receive could not be determined at press time.

Cheers for a Happy Thanksgiving; see you Monday morning.

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