This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Starbucks' Juice Gamble, and 3 Deals That Changed Everything

Stocks in this article: SBUX PEP DIS GOOG

Quaker Oats and PepsiCo rise like Jordan as Gatorade conquers the sports drink market.

Gatorade, the sports drink developed to quench the thirst of energy depleted football players at the University of Florida in 1965 was bought by Quaker Oats in 1983 for $220 million.

The oatmeal and breakfast cereals titan which also financed the 1971 film Willy Wonka & the Chocolate Factory beat out Pillsbury in a bidding war for Gatorade and subsequently grew the sports drinks business through international expansion until selling to PepsiCo in 2001.

Buying Gatorade became increasingly successful for Quaker Oats as sports stars like Michael Jordan helped the sports-drink pioneer sell new flavors, supplementing its traditional lemon-lime and orange drinks. Increased visibility on professional sidelines and new flavors helped Gatorade market its products to Asian, South American and European consumers in the 1980s.

For Quaker Oats, other drinks acquisitions like a $1.7 billion purchase of Snapple in 1994 didn't pan out.

In 2001, Quaker Oats was bought by PepsiCo for $13 billion, as the soda, snacks and juices giant added Gatorade's portfolio of sports drinks to take on Coca-Cola (KO). With Gatorade, PepsiCo bet on an increasing consumer trend toward non-soda drinks, diversifying from its namesake cola brand. PepsiCo took the market share lead in non-carbonated drinks after buying Quaker Oats, nearly doubling its share to 33% and leaping past Coca-Cola's 21% share, according to New York Times reports.

Quaker Oats' deal to buy Gatorade and PepsiCo's later acquisition appear to be an opportunistic diversification from healthy breakfast products and less-healthy snack foods. As of 2010, Gatorade commands nearly 75% of the sports drink market according to Beverage Daily and the unit is responsible for a significant chunk of PepsiCo's revenue.

Gatorade is PepsiCo's fourth largest brand, drawing in over $6 billion in annual sales - eclipsing Tropicana revenue - and only surpassed by Lay's Potato Chips, Mountain Dew and Pepsi-Cola, as of 2010. Meanwhile, Quaker Oats flagship brands acquired by PepsiCo haven't maintained their importance. Annual Quaker Oats sales are roughly $4 billion as of 2010, the tenth largest PepsiCo brand.

For Quaker Oats, a sports drink venture by a breakfast-foods giant in the early 1980s turned out to be a hidden gem and an attractive asset as PepsiCo looked to diversify away from carbonated drinks in the 2000s.

3 of 4

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs