CHICAGO/NEW YORK (Reuters) - Glaceau once declared its aversion to commercialism on a bottle of one of its nutrient-enhanced waters, though with a qualifier.
“Unless of course there’s a lot of cash. Then we’ll talk,” the bottle of its “endurance” vitaminwater said.
Well, Coca-Cola Co. (KO.N) brought the cash — $4.1 billion to be exact — and the talk led to Glaceau, also know as Energy Brands Inc., agreeing on Friday to be acquired by the world’s largest beverage maker.
The buyout may have changed the tone of Glaceau’s owners, including Chief Executive J. Darius Bikoff, who helped cultivate an anti-establishment image, complete with cheeky sayings and the shunning of capital letters on its stylishly simple labels.
“For a company like Coca-Cola to recognize the potential of Glaceau ... is a huge statement about their vision for the future of the beverage business,” Bikoff said during a conference call with reporters. “I can’t tell you how proud I am to be part of the Coke family and what a dream this is for me to fulfill,” he said.
Bikoff, who formed Glaceau 11 years ago after a New York City water contamination scare had him searching for an alternative to tap water, would not disclose his personal stake in the company, which now sells drinks laced with things like vitamins, caffeine and antioxidants.
His initial, electrolyte-laden beverage, smartwater, caught on in New York natural food stores and spread from there.
Other products followed, including fruitwater, and the nationally advertised vitaminwater, which comes in flavors called “power-c,” “endurance,” “revive,” and “focus.”
Despite the success of its brands, the company maintained a sarcastic tone in its marketing, such as this from a bottle of “XXX,” named after its triple-dose of antioxidants. Using the lower-case type that has become one of the company’s marketing signatures the label reads:
“this does not cost $1.99/minute or contain explicit adult content or anything considered ‘uncensored.’ it has not ‘gone wild!!!’ during spring break nor will clips of it be passed around the internet like a certain hotel heiress.”
The company, whose switchboard message asks, “hey bubbalah, what’s doin’? Are you thirsty?”, received early funding from private equity firm TSG Consumer Partners, which sold its 30-percent stake last year to India’s Tata Tea Ltd. TTTE.BO.
But now, just nine months later, Coke has come in, buying out Tata’s stake and the rest of the company.
Coke has promised to operate Glaceau as a separate business and Bikoff and two other top executives, Mike Repole and Mike Venuti have agreed to stay on and run the business for at least three years, a detail industry insiders said was good news.
“It’s a challenge for big beverage companies to continue to nurture and grow small, idiosyncratic brands,” said John Sicher, publisher of trade publication Beverage Digest.
But over time, the company will become more integrated into Coke, said Morningstar analyst Matthew Reilly.
“But I don’t think (Coke is) going to make any sort of attempt to say “vitaminwater by Coca-Cola” any more than PepsiCo’s PEP.N tried to put Pepsi on Gatorade,” Reilly said.