TUSTIN — Snapple Beverage Corp. moved to strengthen its distribution network Tuesday by planning to acquire sizable stakes in beverage distributors in Orange County, Los Angeles and Houston.
The deals are designed to help the East Meadow, N.Y.-based company compete with soft-drink giants Pepsi and Coke, which are challenging Snapple in the $6-billion alternative or New Age beverage market.
"Distribution is sort of like war, and Pepsi and Coke are spending lots of money to get their product into stores and keep it there," said Tom Pirko, president of BevMark, a New York-based consulting firm. "Everyone knew that, at some point, Snapple had to go head-to-head with Pepsi and Coke, and that's a big-money game.'
Snapple said it would end up with a 50% equity stake in Groux Beverage Corp. in Tustin, its exclusive distributor in Orange County. The proposed deal, with a value of about $10 million, calls for Snapple and Groux to subsequently establish a joint venture that would operate a distribution business in Texas. Groux Beverage officials declined to comment on the planned deal.
Snapple also said it would pay $25 million for a 50% interest in Haralambos Beverage Co., its Los Angeles-based distributor. And Snapple plans to spend $3.5 million to acquire Trinity Beverage Co., which distributes Snapple products in Texas.
Each of the proposed transactions is pending definitive purchase agreements.