AB InBev to Buy Energy Drinks Maker Hiball for Undisclosed Terms

Just as the soda giants are going after startups making healthy, non-alcoholic fizz, so too is Anheuser-Busch InBev NV.

After signing a deal last year with Starbucks Corp. to sell ready-to-drink tea, the world's largest brewer on Thursday said it is acquiring Hiball Inc., a San Francisco-based company making organic energy drinks and carbonated juices and water. Terms of the deal weren't disclosed.

João Castro Neves, chief executive of AB InBev's U.S. subsidiary Anheuser-Busch, said the company and its U.S. wholesaler network were looking for new opportunities in non-alcoholic beverages.

"We're looking for high growth, high margins," he said. Energy drinks and sparkling water fit the bill, he said. Hiball was a "natural place to go."

AB InBev in Latin America sells a range of energy drinks, soft drinks and teas. Its latest step toward a similar expansion in the U.S. is a modest one. Hiball, founded in 2005, has 20 employees. It had retail sales of about $40 million over the last 12 months, according to a person familiar with the matter.

Its products include Hiball Energy, a line of caffeinated drinks with ingredients such as guarana and ginseng, and Alta Palla, a line of sparkling juices with organic and fair-trade ingredients.

AB InBev has been broadening its U.S. portfolio as consumers shift away from American lagers, including its Budweiser and Bud Light brands, toward craft beers, Mexican imports, wine and spirits. Nonalcoholic drinks represent about 13% of AB InBev's global volume. In the U.S., the percentage is negligible, a spokeswoman said.

Meanwhile, as Americans drink less soda, Coca-Cola Co., PepsiCo Inc. and other beverage companies have been expanding into fast-growing categories such as sparkling water and health and wellness beverages.

Dr Pepper Snapple Group Inc. in November agreed to pay $1.7 billion for Bai Brands LLC, which makes low-calorie, coffee-fruit drinks. At the same time, PepsiCo bought KeVita Inc., a maker of fermented probiotic and kombucha beverages.

Write to Jennifer Maloney at jennifer.maloney@wsj.com

(END) Dow Jones Newswires

July 20, 2017 12:01 ET (16:01 GMT)