In another indication that healthier premium beverages are supplanting soft drinks, Coca Cola (NYSE: KO) has agreed to pay Glaceau, the maker of Vitaminwater, for $4.2 billion in cash and stock.
While it's not exactly a cheap purchase, I think it makes a lot of sense for Coke. Vitaminwater has had huge growth of late, and that looks likely to continue. With sales of soft drinks flat or even declining, it needs something to drive revenue growth.
This should also be seen as good news for Berkshire Hathaway (NYSE: BRK.A), a major Coke shareholder. Chairman Warren Buffett is regularly seen drinking Cherry Coke, especially at annual meetings but, as he gets older and investors worry about who will succeed him, a switch to a more healthful, vitamin-filled, lower-calorie beverage could extend his tenure at the helm of Berkshire.
Shares of Coke were up on news of the deal, and the price tag could be used to assign a value to other next-generation beverage companies. It makes Hansen Natural (NASDAQ: HANS) look interesting, with its market cap of around $3.6 billion.
More Vitamin Water news
Beth Gaston Moon: High school vending machines getting more eclectic
Zac Bissonnette: PepsiCo plans a lower-calorie Gatorade
Jonathan Berr: Coke, Pepsi thirst for profits from bottled water
Zac Bissonnette: Experts doubt Snapple will satisfy Coke
Zac Bissonnette: Will Coca-Cola gulp down Snapple?
Joseph Lazzaro: Coke's catching up in the health drink segment
Zac Bissonnette: Coke wants vitamin water
Zac Bissonnette: Coke Zero is no zero, it's a big hit
Sarah Gilbert: Fuze acquisition pits Coke v. Pepsi in ritzy juice war
Closing Bell: Can't go up every day (BAC, HE, HPW, COMS, BRCD, WMT, AMD)
Wal-Mart grows profit and cash flow in Q3, but comps still ailing
Chasing Value: Ten stocks for 2010 -- Part 2
