Got Coke? Coca-Cola Now Sole Owner of fairlife LLC
Published: Friday, January 17, 2020
The Coca-Cola Co. completed its acquisition of the remaining stake in fairlife LLC from its joint venture partner, Select Milk Producers on Jan. 3. Coca-Cola now owns 100 percent of fairlife, up from its previous 42.5 percent minority stake. Financial terms of the transaction were not disclosed.
fairlife LLC, which offers a broad portfolio of products in the fast-growing value-added dairy category, evolved from a high-protein dairy shake originally launched by Dallas-based Select Milk Producers as Athletes HoneyMilk.
In 2012, Select Milk Producers, which operates the Continental Dairy Facilities in Coopersville, Mich. reached a national distribution agreement with Coca-Cola. Athletes HoneyMilk was re-branded and re-launched as Core Power, which eventually led to the creation of the joint venture that would later become fairlife.
"We are excited for the next chapter of fairlife's growth and innovation and look forward to continuing to work with our partners across the Coca-Cola system to meet fast-changing consumer needs in a vibrant category," fairlife CEO Tim Doelman said.
"We set out in 2012 to harness the power and nutrition of dairy and give people great-tasting products that provide the nutrition they are looking for," he continued. "Our innovative product lines will continue to grow and improve with the strength and scale of the Coca-Cola Co.."
While sales of traditional fluid milk have been declining, consumer interest in value-added dairy products, led by fairlife, is on the rise, according to Doleman.
"People are looking for better taste and more nutrition in the food items they choose, and the dairy category is no exception," he said.
Since the launch of fairlife ultra-filtered milk in 2014, sales have grown sharply, with strong double-digit growth each year since then. According to Nielsen AMC, fairlife surpassed $500 million in retail sales last year.
fairlife's continued growth has been supported by new product innovation ranging from lactose-free, ultra-filtered milk with less sugar and more protein than competing brands, to high-protein recovery and nutrition shakes and drinkable snacks.
The brand also has been supported by the reach of Coca-Cola's U.S. system with products distributed both through the Minute Maid distribution system, as well as by Coca-Cola bottlers across the country.
"Anytime a major player in the beverage industry makes an acquisition like this, it's a signal that they expect significant increases in consumer demand and sales growth in the value-add dairy market segment," said Ernie Birchmeier, Michigan Farm Bureau's manager of farm and industry relations and livestock and dairy specialist. "It's aslo worthnothing that Select Milk Producers continues to invest in additional dairy processing ventures, including the St. Johns, (Mich.) Cheese plant and expansion of other existing facilities.
"So while the number of Michigan dairy producers directly impacted by this deal may be relatively small, it does drive consumer purchase of dairy products, reduces a burdensome supply and sets the stage for higher prices to be paid to producers, something they're undoubtedly ready for."
In 2018, fairlife also launched in Canada and will begin local production and sourcing in Ontario in spring 2020. Fairlife is also continuing to expand production capability in the U.S. by complementing production in Coopersville, and Waco, Texas, with a new facility under construction in Goodyear, Ariz.
"fairlife is a great example of how we're continually expanding our total beverage portfolio to bring people more of the brands they love," said Jim Dinkins, president of Coca-Cola North America. "This agreement will help ensure that we continue to build on fairlife's innovative history by combining their entrepreneurial spirit and innovation capabilities with the resources, reach and expertise of Coca-Cola."
According to Dinkins, fairlife will continue operating as a stand-alone business based in Chicago.
"This will continue to give Tim and his team the space and running room they need to innovate and build the fairlife brand in a unique and fast-changing category," he said.
"From our side, we will continue to ensure that fairlife has the best distribution possible and will be here to provide resources and expertise in areas such as sustainability and supply chain management to make the brand stronger and better for the future."
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