Coca-Cola relies on upscale dairy products to expand its market beyond carbonated beverages.
Switching gears and diving into the world of dairy, we've got a success story brewing with Fairlife. Launched in 2012 as a collaboration between Coca-Cola and Select Milk Producers, this milk brand was an instant hit in the niche dairy market, even outshining its larger counterparts.
Fast forward to 2020, and Coca-Cola fully owned Fairlife, shelling out $980 million – a move that turned out to be quite the smart investment. Thanks to its success on social media and its ultra-filtered milk that's low on lactose, sugar, and high on protein, Americans just couldn't get enough.
By 2022, Fairlife was truly milking its success, surpassing the $1 billion sales mark. The secret to its success? Its Core Power protein shake, which has been a workout prep staple and kickstarter for healthier morning coffees.
In its latest earnings call, Coca-Cola shared some growth moderation news for Fairlife in 2025. But don't let that worry you – they're just preparing to open a production facility in New York and focusing on their classic carbonated beverages. This move is all a part of their strategy to ensure their iconic Coca-Cola trademark remains the star, but Fairlife is certainly a valuable contributor to their growth.
So how does Fairlife stack up against Coca-Cola's other non-soda acquisition, Costa Coffee, which they picked up in 2018? Fairlife has been breaking records, while Costa Coffee has had a more varied performance. Fairlife's national rollout saw retail sales skyrocket, and it's now a household name.
But what about the challenges? Fairlife hasn't been without its hurdles. Supply chain pressures and concerns about animal welfare practices have presented challenges, but Coca-Cola has been quick to address these issues. Akumil Gajrawala, an analyst for Jeffries, said the acquisition was structured with an "earn-out," meaning the payment is based on the milk brand's success. This strategy allowed Coca-Cola to make a substantial investment while minimizing risk.
Coca-Cola's strategic investments, like building a new processing plant and exploring partnerships in the youth sports market, are helping Fairlife diversify its offerings. The brand is also investing in new technologies to tap into untapped markets and attract a loyal customer base.
And as for Costa Coffee, while it's contributed to Coca-Cola's global brand equity, its integration has been more complex. The brand's performance has been influenced by regional factors, such as the decline in sales due to the performance of Costa coffee in the UK market.
In summary, Fairlife has faced challenges related to supply chain pressures and reputational issues but has strong future growth prospects due to strategic investments and market diversification. Its performance has been more successful compared to Costa Coffee, which has faced regional challenges. This fueled Coca-Cola's continued investment in Fairlife, knowing that their trademark soda may not always rule the roost.
In 2025, Coca-Cola anticipates some growth moderation for Fairlife, but they're planning to counter this by launching a new production facility in New York and focusing on their classic cola beverages. Despite facing supply chain challenges and animal welfare concerns, Fairlife continues to sell its Fairlife Cola alongside its other dairy products in the bustling supermarket aisle.
