Cott cleared to buy Macaw in UK
Corporation, after it received the blessing of British competition
authorities to buy its biggest UK rival, Macaw.
Cott UK and Macaw combined supply 57 per cent of private label soft drinks in Britain, but this was unlikely to lead to higher prices for private label, carbonated soft drinks (CSD), the Competition Commission ruled on Friday.
Cott would be held in check by the "significant bargaining power" of both big and small retailers, coupled with ongoing competition between suppliers of private label, carbonated soft drinks, said Laurence Elks, who led the Competition Commission inquiry.
The deal is an important part of Cott's plan to follow a consumer shift into healthier, non-carbonated drinks, and indicates how cost pressures are forcing more consolidation on the soft drinks industry.
Regulators had spent several months investigating Cott's 75.4m takeover of Macaw, due to fears the firm could monopolise the market for private label, fizzy drinks and push up prices.
The Competition Commission, however, ruled that Cott's main other rivals - Prince's, Silver Spring and Villa - had a combined spare capacity, "which is almost as large as the total demand of the retailer with the largest volume of own-label, PET-bottled, CSD sales".
The spare capacity would ensure retailers continued to have a choice of suppliers, therefore restricting Cott's ability to raise prices, the Commission said.
Cott, the world's biggest supplier of private label soft drinks, said its buyout of Macaw would help to break out of fizzy drinks.
Stagnant sales of carbonated soft drinks in the UK have affected all major soft drinks firms over the last year, although the category still made up three quarters of the market last year, according to a recent Britvic report.
Macaw gives Cott a first inroad into aseptic drinks production, a fast-emerging technique among soft drinks producers because of its ability to satisfy growing consumer demand for non-carbonated and healthier products.
"We will also look to leverage the aseptic manufacturing expertise developed by Macaw for the benefit of other Cott divisions," said Cott chief executive John Sheppard.
Cott was stung in several markets last year by consumers switching from fizzy sodas to healthier drinks like juice and bottled water. The group's net income fell from $78.3m (€62m) in 2004 to $24.6m in 2005.
