Keurig Dr Pepper (KDP) has entered the sports hydration category after striking a deal to sell, distribute and merchandise the Electrolit brand in the US.
The Schweppes maker described the category as a “key white space” and said it planned to “significantly expand Electrolit's distribution and continue the brand's accelerated growth”.
KDP said the “transition” of Electrolit's distribution will begin next year.
Founded in Mexico in 1950, Electrolit is manufactured and owned by Pisa Pharmaceuticals – the largest pharmaceutical company in Mexico and Latin America. It comes in 15 flavours and entered the US market in 2014.
KDP said in a statement today (26 October): “Electrolit is growing at a strong double-digit rate in the US, where it already generates more than $400m in retail sales and has increased more than tenfold over the past five years.”
Under the partnership, distribution will move from a “large network” of distributors as KDP will sell and distribute Electrolit in the “vast majority of KDP's company-owned direct store distribution territories and across all channels of trade”.
Andrew Archambault, KDP president of commercial and beverage concentrates, said: “We are thrilled to enter the sports hydration category with Electrolit, broadening our portfolio to address this important beverage occasion for our consumers. Electrolit is a differentiated brand with tremendous consumer appeal, and KDP's proven sales and distribution capabilities are poised to unlock its significant growth potential.”
Electrolit’s flagship product contains six ions for electrolyte absorption as well as magnesium, potassium and calcium. The company also sells a sugar-free variation.
Caridad Ochoa, president and chief executive of Electrolit, added: “We look forward to a highly successful alliance and partnership between our companies. KDP is the right strategic partner to further expand Electrolit's footprint in the US. KDP's scale, capabilities and insights, coupled with Electrolit's rich heritage and loyal following, will drive the next stage of our determined growth initiatives.”
KDP announced the distribution deal alongside its third-quarter results today (26 October).
Net sales for the period increased 5.1% to $3.81bn, compared to $3.62bn in the year-ago period. Operating income increased 127.4% to $896m, compared to $394m the previous year.
However, sales at the company's US coffee business were down 3.2% at $1.01bn, with volumes falling more steeply than they did in the group's main beverage business.
The group posted adjusted earnings of $0.48 per share, beating analysts’ consensus of $0.47.
Looking ahead, KDP reaffirmed its guidance for 5% to 6% net sales growth and 6% to 7% adjusted earnings growth.
Shares jumped 1.7% Thursday morning to $29.59.
The move to handle Electrolit’s sales comes shortly after KDP announced a $100m investment in a coffee manufacturing plant in the US last week.
