Coke, SoBe in talks

Privately owned South Beach Beverage Co. (Norwalk, CT), makers of SoBe herbally-enhanced soft drinks, is in talks with Coca-Cola Co. (Atlanta, GA), according to a Reuters report by David Jones. SoBe, with its fast-growing range of "green lizard logo" non-carbonated drinks, has attracted Coke's attention.

SoBe co-founder Tom Schwalm said with SoBe running the fastest-growing soft drinks brand in the U.S., it needed financial backing and talked with leverage buyout firm J.W. Childs Associates, and that in turn attracted Coca-Cola.

Talks started in April with Childs initially wanting a 70% stake. But as discussions progressed, the deal now on the table is for Coca-Cola to take 20%, Childs 50%, and existing investors 30%. Talks are continuing.

Coca-Cola would give the small group help in distribution. SoBe offers high-sugar herbal juices, teas and dairy-based products. This "new-age" market is showing 10% annual growth compared with little growth from carbonated soft drinks, said Schwalm.

Snapple, bought by Cadbury last month for $910 million, has a 38% share, SoBe 18%, and AriZona around 10%. Schwalm doesn't regard products such as PepsiCo's FruitWorks and Coke's Fruitopia as "new-age" because they contain preservatives.

SoBe is introducing new low-sugar lines and bringing its exotically named products such as Lizard Fuel and Lizard Lightening to the UK in July.

Edited by Judy Rice,
Managing Editor, Beverage Online