Keurig Dr Pepper (KDP) is set to acquire water brand CORE Nutrition for US$525 million in a step that sees the company enter into the premium water category. With bottled water the number one beverage in the US, above the consumption of soft drinks, this is a significant move for KDP.

Premium bottled water is a growing trend among consumers – wanting extra value added to water such as nutrients and flavours, as more people turn to healthier but flavourful alternatives to soft drinks and alcohol. This trend has provided manufactures in the water category with the opportunity to grow further.

“The premium water category is very competitive. This deal solidifies the future for CORE; we are excited to see where the brand can go with KDP,” said Michael Burgmaier, managing director of Whipstitch Capital.

Given CORE Nutrition’s exponential growth of approximately 115 percent in the past three years, and KDP’s lack of product that fits into the water category, the decision to acquire the company was a significant move.

“The health of the way that product is selling is strong. Not only is it growing really rapidly but the velocity numbers are increasing really well and it’s very difficult to grow velocity when you’re growing that quickly. It’s an obvious choice [for KDP]. I think it definitely fills a gap and gives them an opportunity,” said McCoy.

“I am certain that, under its ownership, CORE will continue to see tremendous long-term success. I am a strong supporter of the KDP strategy and business model and am looking forward to being a shareholder in the company,” said the founder of CORE, Lance Collins.

“KDP’s move to purchase CORE Nutrition is a sign the company sees flavoured and functional waters as categories that will provide growth in coming years,” said Alexander Esposito, research analyst at Euromonitor International.