Phusion Projects, the Chicago company that owns Four Loko, is reported to be evaluating a potential sale of the ready-to-drink alcohol brand in a process that could place a valuation near $400 million, according to people briefed on the matter. The firm has engaged investment bank JPMorgan to run the sale process, the sources said. JPMorgan declined to comment and Phusion Projects did not reply to requests for comment.
The potential marketing of Four Loko comes as ready-to-drink beverages have become one of the few expanding segments inside a broader U.S. alcohol market that is otherwise contracting. Industry data cited by the sources indicate RTD sales grew at a double-digit pace, even as the combined beer, wine and spirits category fell in the year referenced.
Deal activity in the RTD space over recent years underscores investor interest. Examples highlighted by the sources include a transaction in which a major brewer paid as much as $490 million for an RTD party punch brand, and another acquisition in 2024 involving an RTD cocktail brand known for its distinctive bottle shape. According to the data referenced, RTD sales advanced 16.4% year-over-year and approached a $4 billion valuation in the period cited.
Four Loko first entered the U.S. market in 2005 as a caffeinated alcoholic beverage. The original formulation combined malt liquor with caffeine and stimulants such as taurine and guarana, and the drink carried up to 14% alcohol by volume. It gained popularity among college students but also drew scrutiny after a number of hospitalizations prompted several universities and states to ban it.
In 2010, the Food and Drug Administration sent warning letters to producers of caffeinated alcoholic beverages including Four Loko, indicating the inclusion of caffeine in those products constituted an "unsafe food additive." In response, Four Loko removed caffeine, guarana and taurine from its recipe that year and was reformulated.
Since reformulation, the brand has rebuilt its retail footprint, regaining distribution across convenience stores and larger retailers, including Walmart, while retaining the bold camouflage-style packaging that made it instantly recognizable. The brand has also pursued expansion beyond its core consumer base, aiming at younger Gen Z drinkers and international markets.
"For over a decade, our sales have been leading the (Flavored Malted Beverage) market by embracing bold innovation, unconventional marketing, and a risk-taking attitude that delivers results year after year," a Phusion Projects chief marketing officer said in a press release when the company introduced a new flavor last year.
Phusion Projects is not limited to Four Loko in its portfolio. The company also owns several other beverage labels, including Mamitas, Pirate Water, Basico Tequila and Earthquake.
Any transaction would come at a time when buyers and sellers are closely watching how consumer preferences and retail distribution trends are reshaping the beverage sector. The outcome of a potential sale, including whether it reaches the reported valuation or attracts strategic or financial bidders, was not disclosed by the sources.