Coca-Cola promises that the brand will continue to be sourced and bottled in Monterrey.
It's no secret that soda sales have been sinking. Consumers have become more interested in a health halo than a sugary buzz, and questions around whether artificial sweeteners are any better for you has caused the sale of even diet sodas to struggle. So what's the largest soda brand in the world to do? Invest in an increasing popular brand from a beverage category that is still seeing growth… sparkling water.
Today, the Coca-Cola Company announced that it was acquiring the Mexican sparkling water brand Topo Chico in a deal reportedly worth $220 million. Topo Chico, which was founded in 1895, and is sourced and bottled in Monterrey, is already available in 35 states throughout the U.S., but is especially popular in Texas, which accounts for 70 percent of all American sales. Matt Hughes, VP of Emerging Brands, Incubation, said the plan "is to extend its reach while preserving its heritage." As Coca-Cola points out, part of the brand's success has been in the craft cocktail scene in areas like Austin, so it wouldn't be surprising to see Coke push this hip angle moving forward. "We are going to thoughtfully expand the brand's geographic presence – to create more 'Texases,'" Hughes later elaborated.
According to BevNET, in the past 52 weeks to August 13, Topo Chico had sales of $74 million. Though that only a small portion of the $4 billion sparkling water category, it's still 29 percent growth from the previous 52 weeks, so Coca-Cola would appear to be buying at a good time. The Mexican brand now joins Coca-Cola's other sparkling water offerings which include flavored and unflavored sparkling versions of its Smartwater and sparkling versions of Dasani. BevNET points out that, unlike those brands, since Top Chico offers a glass bottle packaging, Coke could position its new acquisition to compete against more premium sparkling water brands.
But of course, the big question with any buyout is, What will the new owners do to muck things up? Well, Hughes insisted that when it comes to the actual water, nothing will change. "Topo Chico will continue to be sourced from the same sacred and special place in Monterrey," he said, "and bottled in the same best-in-class facility where it has been for many years." Yes, Coca-Cola will continue to ensure that only the finest Mexican water will go into its bottles – which based on the reputation Mexican water already has, is an important promise.