Coca Cola Makes Minority Investment In Kobe Bryant-Backed Sports Drink Maker BodyArmor

Coca-Cola Co. (KO) on Tuesday announced that it's buying a minority stake in BodyArmor, an upstart sports drink brand backed by Los Angeles Lakers legend Kobe Bryant and other athletes.

The agreement makes Coca-Cola, which also owns Powerade, the second-largest shareholder in the New York-based beverage company and helps strengthen its position in the sports drink market.

The move allows BodyArmor full access to Coke’s bottling system. The deal would also eventually let the soft drink company claim ownership over BodyArmor.

Financial terms of the deal were not disclosed.

"BODYARMOR is one of the fastest growing beverage trademarks in America and competes in exciting categories," said Coca-Cola North America President Jim Dinkins. "I have no doubt it will prove to be a strong offering to our system alongside our already powerful hydration portfolio as we accelerate our position as a total beverage company."

The investment comes at a time when soft drink brands are seeing a decrease in sales as customers lean toward healthier beverage options.

PepsiCo (PEP) on Aug. 6 announced that Chief Executive Officer Indra Nooyi, who has been with the company for 12 years, would be stepping down on Oct. 3. The company in 2010 sought to triple sales of healthy-choice products by 2020 but saw sales grow only 75 percent by 2017.

BodyArmor’s sales grew to $130 million in 2016, a 154 percent increase from 2015, but well behind PepsiCo-owned Gatorade and Coke’s Powerade. BodyArmor, however, saw sales surge in 2017 to $235 million, while Gatorade and Powerade saw sales stay relatively flat.

BodyArmor, which totes itself as a healthier beverage alternative, offers a selection of low-calorie drinks made with natural flavors and sweeteners and electrolyte-infused waters with vitamins like potassium and calcium. It has enlisted support from star athletes such as Houston Rockets guard James Harden and Los Angeles Angels outfielder Mike Trout. A report in April by Fast Company claimed Bryant is the No. 3 investor and creative director.

Gatorade, meanwhile, has long been the dominant brand on the sports drink market. It was first developed in 1965 by the University of Florida to help student-athletes stay hydrated during events. Gatorade has recently seen U.S. sales decline 0.5 percent to $5.9 million in 2017.

Entrepreneur Mike Repole co-founded BodyArmor in 2011. He was also responsible for Glaceau’s VitaminWater/Smartwater, which was sold to Coke for $4.2 billion in 2007.