The purchase came just two months after the company revealed that it would begin distributing the entrepreneurial brand on a national basis, and only six months after it began to deliver the brand to stores in the Midwest.
Core Power, a branded beverage venture that was spawned by one of the country’s largest dairy cooperatives, will be run independently while under Coke’s ownership, according to Jones, a former marketing executive with the soda giant.
He said the acquisition represents the first major move into the $12 billion dairy industry by either Coke or rival PepsiCo. Pepsi’s “Blue System” currently distributes Muscle Milk, an independently owned whey protein beverage that ushered in a new era of direct-store-distribution (DSD) protein drinks several years ago.
With an innovative protein-isolating manufacturing process in hand, Jones said he believes that Core Power can provide a new level of milk-based functionality to the Coke portfolio, one that he believes may ultimately catch Muscle Milk, which exceeds $250 million in sales.
“We think we can broaden the protein platform beyond the weightlifter and the athlete,” Jones said. “I would love to launch a product that meets so many consumer need states where they are.”
For a milk-based beverage, the category Core Power – originally called “Athlete’s HoneyMilk” – wants to dominate what Jones called “milk-plus.” In that area, soy, hemp, and nut-derived milk substitutes have become nearly a $1 billion business, according to recent sales figures from the Symphony/IRI Group, which tracks retail sales.
“It’s all in the promise” of the milk filtration system, Jones told BevNET. “It’s a big story, Coke getting into the dairy world.”
Indeed, the lack of branded dairy products is a business opportunity that has been raised in the past; 18 months ago, investment firm Rabobank released a study indicating that dairy held underserved potential as a branded category.
Jones remains the largest shareholder in Core Power, although its newly-acquired parent company will soon occupy board seats and help begin to guide strategy, Jones said. The initial ties to the company came through Coke’s Venturing and Emerging Brands (VEB) group, although Core Power leapfrogged that entity somewhat when it entered into a national distribution agreement with Coca-Cola Refreshments (CCR), Coke’s distribution arm. Following the acquisition, both CCR and independent Coca-Cola bottlers will have the opportunity to distribute the brand.
Deal terms were not revealed and the occupants of the board seats have not yet been determined, according to Jones, who said he had worked largely with VEB to sell Core Power’s potential to the larger company.
Coke released an announcement concerning the deal this morning in the following press release:
ATLANTA – Over the past several months, Core Power has been the delicious new choice for those seeking a high protein milk shake to support their active lifestyle. Today, The Coca-Cola Company and Select Milk Producers, Inc. (Select) are announcing the acquisition of equity stakes in the newly-created Fair Oaks Farms Brands, LLC to drive growth and expansion of Core Power and to create an innovative portfolio of brands and products that feature the value-added nutrition of dairy.
“At The Coca-Cola Company we strive to provide people with a wide range of beverage choices that meet every occasion and lifestyle need. This new investment led by our Venturing & Emerging Brands group is another great example of our ambition to be the best brand, sales and customer service system in North America,” said Steve Cahillane, President and CEO, Coca-Cola Refreshments.
The investment validates the potential both parties see in offering higher quality value-added health and wellness beverages. “Our leadership in technology, innovation and sustainability within the dairy industry, combined with The Coca-Cola Company’s brand development and distribution capabilities will enable a new portfolio of nutritional beverages with strong growth potential,” said Mike McCloskey, Co-Founder and CEO of Select, an independent group of 87 American family farmers.
According to Steve Jones, CEO of the new Fair Oaks Farms Brands, LLC, “Our initial launch of Core Power® is off to a great start and this new partnership agreement with VEB will help us realize our vision of becoming a leading health and wellness company and the most trusted brand leader in dairy nutrition.”
Core Power is currently distributed by Coca-Cola Refreshments and available in 26g and 20g protein versions and comes in 11.5 ounce recyclable plastic bottles. It is aseptically packaged so it can be distributed in a shelf stable environment until chilled before consumption. Its great taste profiles are enhanced through the addition of natural sweeteners and high quality flavors. All five drinks are lactose- and gluten-free. Simple and great-tasting, Core Power flavors add energizing refreshment to any occasion.
