Coke Buys Fuze, Vows Unit Will Remain Separate

It wasn't exactly stunning news yesterday that Coca-Cola will buy Fuze Beverages, maker of juices and flavored teas. It was more a realization that the corner has been turned, and that the soda giant no longer will rely on creating new products but will continue to buy innovation produced outside the company.

Fuze enhanced teas/juices, NOS energy drinks and Water Plus enhanced waters will plug holes in Coke's non-carbonated line.

Observers saw this coming two months ago when Muhtar Kent was elevated to president/COO and, apparently, CEO-in-waiting. That move led to the departure of longtime company veteran Mary Minnick, the executive vice president/president of marketing, strategy and innovation. Among the beverages conceived on Minnick's watch were Enviga and Coke Zero. Last month, Minnick announced she will depart in March for "professional and personal reasons" and move to the United Kingdom. (One analyst who covers Coke said she plans to marry a long-time beau in the U.K. and probably cannot disclose any employment plans until her work status is clear in that country.)



Coke will allow Fuze to operate as a separate unit, a move lauded by beverage industry expert Gerry Khermouch, executive editor of Beverage Business Insights.

"It's a good first step, but it's no guarantee--as Pepsi showed with SoBe--that the brand won't go inert on the shelf. The key will be giving the Fuze people their head and encouraging Coke bottlers to pay attention to the brand."

Terms of the Coke/Fuze deal were not disclosed, but it is estimated to be between just under $250 million. Last year, Fuze had an estimated $100 million in gross sales. Full-wrap Fuze bottles have been ubiquitous in various vending sites. The company's NOS line is said to be approaching 1 million cases in volume, and Fuze has set up a separate unit to establish Water Plus as an organic alternative to Glacéau's Vitaminwater.

Fuze founder/CEO Lance Collins said sales volume in 2006 was 50% above projections.

The acquisition of such a promising brand follows a strategy laid out by rival Pepsi, which bought Izze sodas and Naked refrigerated juices.

Coca-Cola has acquired other brands in the past few years as it attempts to diversify its offerings. Last November, it launched a line of iced coffee drinks with Caribou Coffee, and in August it partnered with Godiva Chocolatier on Godiva Belgium Blends chocolate-coffee drinks.

Next story loading loading..