Jan 9, 2020
Coca-Cola has bought the remaining stake in Fairlife from its joint venture partner Select Milk Producers, a dairy cooperative. Coca-Cola previously owned a 42.5% minority stake. Fairlife, which launched in 2012, started with its Core Power product, a high-protein milk shake, and has since expanded into a wide portfolio of value-added dairy products. Fairlife will continue to operate as a stand-alone business based in Chicago.
Fairlife “plays an important part in the beverage company’s strategy to continue growing as a total beverage company as it innovates to bring people more new products that meet their changing lifestyles and needs.
Under the tenure of Coca-Cola’s CEO James Quincey, the beverage giant has been moving aggressively to diversify the company’s portfolio beyond its iconic sodas. Its decision to fully acquire Fairlife is the latest step in that ongoing process. Despite facing challenges with the brand’s reputation in 2019, value-added dairy has been a growing sector in the U.S. and one that could help Coca-Cola going forward.
Fairlife’s ultra-filtered milk, a higher-protein and lower-lactose product, debuted in 2014. Sales have grown by double digits each year, including 42% in the first quarter of 2019. Fairlife reached more than $500 million in retail sales last year, according to Nielsen AMC figures provided by Coca-Cola, so it makes sense that Coke would want to wholly own this brand.
Fairlife has expanded its offerings in recent years, growing from its filtered milks to high-protein recovery and nutrition shakes and drinkable snacks. Fairlife has already benefited from Coca-Cola’s reach, with its products distributed through the Minute Maid distribution system and Coca-Cola bottlers.
Growth will likely continue to be a major goal of the brand when the acquisition closes. In 2018, Fairlife launched in Canada and the company is continuing to expand its production in the U.S. Fairlife already has production facilities in Michigan and Texas, and it is working to build a new facility in Arizona. Although the brand will still operate as a standalone business, building another facility expands its reach and its potential to grow.
This purchase makes sense for Coca-Cola because the company is working to become a “total beverage company” through acquisitions. Coca-Cola has acquired brands in a variety of growing, trendy categories, such as Honest Tea, Topo Chico sparking mineral water, Suja Juice, Zico coconut water and Costa Coffee. Coca-Cola’s growth strategy, fuelled in part by a move toward better-for-you beverages, is unlikely to end anytime soon.