June 28, 2016

Coca-Cola’s Venturing and Emerging Brands (VEB) unit has acquired a minority stake in California-based L.A. Aloe Inc., a producer of certified organic aloe water beverages for an undisclosed amount. The investment is the latest in a string of non-core investments being made by the soft drink giant in response to softening soda sales in the U.S.

“VEB has proven that it can help determine how and when brands can be built,” said Aloe Gloe co-founder Dino Sarti. “The Coca-Cola system is also really best-in-class and can reach consumers like no other distributor. Putting those two capabilities together is very powerful.”

L.A. Aloe launched its Aloe Gloe line of drinks in 2012, and has since seen a two year growth rate of 64% according to Neilsen. The low-sugar and low-calorie product line includes four flavors – Crisp Aloe, Coconut, Lemonade, and White Grape which are currently being sold through 20,000 retail sites across the U.S.

“Our minority investment in Aloe Gloe gives VEB a further entry in the emerging market segment for plant-based beverages,” said VEB President Scott Uzzell in a company statement. “We look forward to partnering with Aloe Gloe to help them capture growth from this exciting consumer trend.”

Created in 2007 as a vehicle through which Coca-Cola could diversify and identify promising brands to back, Coke’s VEB unit’s portfolio includes Honest Tea, Zico coconut water, and Suja Juice. Other recent acquisitions include soy-based beverage company AdeS from Unilever for $575 million and the addition of China’s Culiangwang Beverages for $400.5 million.

As soft drink sales continue to weaken, key plant-based food and beverage categories are widely outperforming their traditional counterparts. Food Business News reports that growth in the plant-based meat, tofu, milk, yogurt, cheese, and cream segments has seen growth exceeding 8.7% over the past two years, compared to growth of 3.7% for the traditional segments over the same time period according to data from the market research group SPINS.

In the light of such growth, the largest food companies have stepped up their investment interest in startups within the emerging segment. Hormel Foods, AccelFoods, Kellogg, General Mills, and Campbell Soup are just some of the field of rivals looking to capitalize through investments in the natural, free-from and organic food and beverage space.