Will PepsiCo Acquisition of Muscle Milk Help Them Beat Coca-Cola?

  • Gatorade — which started to diversify out of isotonic sports drinks to sell protein beverages and bars in 2015.
  • Cytosport — which makes Muscle Milk RTDs and several powder and bar product variations. It also owns a sub-brand called Evolve that is focused on plant-based protein products.
  • Health Warrior this is another newly acquired brand that focuses on bars, powders, and other functional food offers that surround superfoods and seeds for protein.
  • Core Power/Fairlife — The Coca-Cola Company combined these two brands recently but left Core Power as the high-protein beverage brand name. They also recently added a “Fairlife Smart Snack” beverage that is around 15g of protein but adds oat flour and honey for a mainstream meal replacement.
  • OWYN — this brand resembles Cytosport’s Evolve in its offerings and proposition as being plant-based (bars, powders, and beverages)

Why is the Protein Beverage Category Important

“Dark Horse” of the Transaction

What is Next for Muscle Milk?

  1. They will 100% go “all-in” on the beverage and snacks side of Cytosport. I would expect to see Muscle Milk alongside Gatorade in Food/Mass retailers and I would expect to even see Evolve make more noise in those sales channels.
  2. I don’t think PepsiCo will cut the powders business but it will likely continue to take backseat to the functional beverage and foods product offerings.
  3. I would expect that PepsiCo will rebuild the Muscle Milk brand story with the synergies they have with sponsorship of athletes. They obviously do a superb job with Gatorade and they have no excuse now not to use some of those abilities on the Muscle Milk brand name.
  4. Maybe a bit counter-intuitive to #3, but I think PepsiCo will try to speed up the return on capital to get sales growth and margin expansion. Since this is the first acquisition by the new CEO, he needs this to be successful in the eyes of the investment community. You don’t want your legacy at one of the largest CPG companies in the world to be tainted right off the bat…would you?!?

The Age Old Question Continues…Coke or Pepsi?

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Joshua Schall, MBA

Joshua Schall, MBA

Functional CPG Business Strategist | Entrepreneurial Ideation to Commercialization Expert | Early-Stage Investor | Futurist | Sports Stat Nerd |