Dr Pepper Snapple Group Inc. on Tuesday said it agreed to buy Bai Brands LLC, the maker of low-calorie, coffee-fruit drinks, for $1.7 billion, as consumers continue to turn away from traditional sodas.
Bai is known for its drinks that are made with extracts from the fruit that surrounds the coffee bean. The beverages are marketed as using natural sweeteners and being rich in antioxidants and low in calories. Bai's product lineup includes enhanced water, carbonated flavored water, coconut water and ready-to-drink teas.
Dr Pepper Snapple said the move allows it to meet the growing demand for beverages deemed healthier and more natural.
Soda makers have adapted to changing consumer tastes by marketing soda as a special treat and by selling smaller sizes. Companies have also said they are working to reduce the amount of sugar in their products and to diversify beyond soda as more countries weigh special taxes on high-calorie drinks in a bid to combat rising obesity and diabetes.
Dr Pepper Snapple is already an investor in Bai and has distributed Bai products for a few years. Bai, which was launched in Princeton, N.J., in 2009 and expects to have about $425 million in net sales in 2017.
The deal, expected to close in the first quarter of next year, will reduce Dr Pepper Snapple's earnings by about 3 cents a share next year due to increased marketing expense for the brand and costs associated with financing the purchase.
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(END) Dow Jones Newswires
November 22, 2016 08:05 ET (13:05 GMT)
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