Yahoo Finance's Brian Sozzi and Emily McCormick discuss Coca-Cola's upcoming acquisition of BodyArmor.

Video Transcript

BRIAN SOZZI: Also want to touch upon Coca-Cola. I mean a huge deal out of this company this morning, Emily. $5.6 billion in cash to go out and buy the rest of the BodyArmor stake. And that, of course, is the Gatorade rival that they didn't own.

Coke took that stake in 2018 in BodyArmor and really clearly making a statement here that Powerade had just ain't getting it done anymore, I do like Powerade. But when you cut spend $5.6 billion on BodyArmor, it says a lot about the state of that Powerade business and how dominant Gatorade continues to be in this market.

And, Emily, I do have one other thing here-- worth noting here. Let's keep in mind that Coke still owns a 19% stake in monster. And I think it's time for investors to start pushing back on Coca-Cola.

What are you going to do with this stake? Do you get rid of it and try to allocate that cash to somewhere else. Why have you not purchased monster the company in its entirety? Are you not a believer or energy drinks? Unclear but looks to be that Coca-Cola is putting a bigger stamp on the future of the sports drink market moving forward.

EMILY MCCORMICK: Absolutely, Brian. And we know that CEO James Quincey has been pushing really for Coca-Cola to become a total beverage company. We know that the company has been expanding its portfolio out of its flagship soft drinks. Of course, over the past couple of years, with a number of acquisitions and of course, also even recently introducing an alcoholic version of that Topo Chico sparkling water here.

But really focusing in on this BodyArmor stake. The company, of course, as you mentioned, buying that for $5.6 billion in a move that would value that sports drink brand at about $8 billion. Now, of course, as you were mentioning as well, this dichotomy with Gatorade here, which is still the dominant player in the sports drink market.

But BodyArmor sales are quickly gaining traction here as well. And the "Wall Street Journal" said in its report earlier today that the BodyArmor brand expects to generate about $1.4 billion in retail sales this year. And that compares to just $250 million in sales in 2018 when Coca-Cola had first invested in the startup. Because, of course, Coke does already own about 30% of that brand.

So, as you mentioned, Brian, I do think it's going to be interesting to see how Coca-Cola actually builds out these acquisitions, whether this is something that is accretive for this company and the stock, especially since that has, of course, trailed the broader market, up just about 2.8% for the year to date versus the S&P 500's 22.6%. So hopefully getting a little bit of an acceleration here as we continue to have this portfolio get built out.

BRIAN SOZZI: Yeah. And I'll just add real quickly here. This is a different acquisition, I think, for Coca-Cola than when PepsiCo bought Gatorade back in December 2000. At the time, that was Michael Jordan and Gatorade full-on domination here. There are a lot of other sports drinks on the market here, increasingly from very hungry competitive upstart companies.

You have Roar out there. A drink that I have tried numerous times, I like it. Marketing itself as really no added colors, good thing there. And then BioSteel.

Canopy Growth, the CBD maker, took a stake, a controlling stake in BioSteel. Another competitor to BodyArmor. Now the speculation is that a Canopy Growth will add CBD to its sports drinks. So BodyArmor is not out there just dominating the market by itself it has Gatorade and many other of the upstart companies.