When James Quincey became CEO of Coca-Cola (KO, Financial) in 2017, the company faced declining soda sales due to health concerns. Coca-Cola aimed to diversify beyond sugary drinks, and a key step was focusing on milk with the launch of Fairlife in 2012. Initially a joint venture with Select Milk Producers, Fairlife gained popularity with its unique packaging and health-oriented products like almond and protein milk.
In 2020, Coca-Cola fully acquired Fairlife for $980 million. The brand exceeded expectations, partly due to its social media presence in the health sector. Despite rising food prices, Fairlife's ultrafiltration process, which removes lactose and sugar while doubling protein content, attracted consumers. By 2022, Fairlife's sales surpassed $1 billion, driven by its Core Power protein shakes, which face little competition in the market.
However, Coca-Cola anticipates slower growth for Fairlife by 2025 due to ongoing construction of a new plant in New York and the dominance of carbonated drinks in its sales. Fairlife's performance has outshined other non-carbonated acquisitions like Costa Coffee. Analysts note that the acquisition's profit-sharing structure means Coca-Cola's final payment could reach $6.2 billion, making it one of the company's most expensive acquisitions.
Analysts highlight growing consumer interest in health products, with Fairlife benefiting from Coca-Cola's extensive distribution network. However, risks include the potential for health products to quickly fall out of favor on social media and past legal issues over animal welfare claims.
