(2521)#foodrecipes | New Age may divest smaller brands to focus on Nestea, Evian and illy

These brands are among the more well-known offerings in the tea, coffee and water spaces, which remain popular among consumers looking to curtail their sugar intake in favor of better-for-you beverages. In a statement, Willis said "there is no better time to be in the business of healthy products" and that his company "is extremely well positioned to address consumer concerns for staying healthy around the world with our unique portfolio of healthy products and omnichannel route to market.”

By divesting several of its drinks, New Age could spend its money on growing the reach of the more well-known brands that it recently acquired. Smaller companies such as New Age can have a harder time competing against bigger players like Coca-Cola or PepsiCo that have deeper pockets and well-established relationships with retailers and distributors. These connections become even more valuable as companies navigate the shift of food and beverage sales from stores to e-commerce, a challenge for even large CPG businesses.

"Right now, these small brands cost us a lot of money, a lot of cash and they're just too kind of heavy lifting versus the better opportunities, better, bigger brands, and better, more profitable channels we now have in better, more profitable markets," Willis said told analysts in the Seeking Alpha transcript.

During its earnings call, the company noted that it has "gained some important new distribution" on Nestea in certain Costco regions and with Walmart nationally. New Age is no doubt hoping for similar sales growth in Nestea and other bigger brands that it will decide to keep.

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