Atlanta: When James Quincey became Coca-Cola‘s CEO in 2017, soda consumption was falling due to health concerns. The company started diversifying beyond sugary drinks.
Milk Investment
Coca-Cola moved away from carbonation and focused on milk. Fairlife, launched in 2012, used modern, minimalist packaging. It competed well with almond, protein, and pistachio milk brands. Fairlife outperformed other dairy aisle drinks.
In 2020, Coca-Cola fully acquired Fairlife for $980 million. The brand’s popularity soared due to social media influence in health and wellness circles. Despite rising food prices, Americans continue buying Fairlife due to its ultra-filtered process. This process removes lactose and sugar while doubling protein.
In 2022, Coca-Cola reported Fairlife’s annual sales exceeded $1 billion.
Protein Shake
Fairlife’s success comes mainly from Core Power, a protein shake popular in many grocery stores. It has few major competitors.
Despite Fairlife’s rapid growth, Coca-Cola expects slower expansion in 2025. The company is constructing a new facility in New York. Coca-Cola still relies heavily on carbonated drinks. Its competitor, Pepsi, focuses on Frito-Lay snacks.
Compared to Coca-Cola’s 2018 Costa Coffee acquisition, Fairlife has outperformed significantly.
Unexpected Success
The deal was structured with an earn-out clause, meaning the final cost depended on Fairlife’s performance. Earn-out deals help companies minimize risk when uncertain about success.
Now, Coca-Cola expects the final Fairlife acquisition cost to reach $6.2 billion. This is in addition to the initial $980 million. It makes Fairlife one of Coca-Cola’s most expensive purchases.
Strategic Growth
Health-conscious U.S. consumers have increased protein intake in recent years, benefiting Fairlife.
Protein shakes represent a $6 billion market, according to Beverage Digest. Mid-priced grocery products are usually the first to be cut from budgets. However, consumers often choose the cheapest or most unique options.
Potential Risks
TikTok trends have fueled Fairlife’s growth. Users post Core Power shakes before workouts or mix Fairlife milk with coffee.
But viral products can quickly lose popularity, especially in health-focused markets.
In 2022, Coca-Cola and Fairlife settled a lawsuit for $21 million over cow mistreatment allegations. The lawsuit claimed Fairlife falsely promoted ethical animal treatment while charging a premium.
Expanding Portfolio
Fairlife is building a large production facility in New York. However, Coca-Cola is looking at more categories for expansion.
