A Coca-Cola Co. subsidiary in China has agreed to buy a Chinese producer of multigrain juices for $400.5 million, six years after its $2.4 billion offer for Huiyuan Group was nixed by regulators in the world’s second-largest economy.
Coke is moving to acquire Xiamen Culiangwang Beverage Technology Co. Ltd., the beverage business of Hong Kong-listed China Culiangwang Beverages Holdings Ltd., according to a statement by Coke. The transaction is subject to government approval.
The proposed acquisition comes as Coke continues to diversify its product mix as sales of “sparkling” beverages — fizzy soda drinks like Coca-Cola and Diet Coke — continue to face slower growth than many non-carbonated segments.
China, where Coke has 43 manufacturing plants and sells 10 brands, is the company’s third largest market behind the U.S. and Mexico. An engine for double-digit volume growth for much of the last decade, annual increases in the market were 3 percent and 4 percent for the last two years, respectively.
One consistent bright spot in the juice space has been Coke’s Minute Maid Pulpy, a locally developed product where pulp is added back into the juice. Launched in 2009, the brand grew to $1 billion in revenue in five years, at which point Coke launched Minute Maid Pulpy Super Milky, a mix of juice, milk powder pulp and coconut flakes.
Xiamen Culiangwang’s offerings include protein drinks in the green bean, red bean and walnut flavors sold under the brand China Green Culiangwang, according to Coke.
Xiamen is a relatively small but prosperous city located in the southeastern coastal province of Fujian.
Coke operates one of its largest global product innovation centers in Shanghai.
China Culiangwang, the parent company, had revenues of 2.09 billion yuan, about $337 million, during the 2013 fiscal year ended April 2014.