French food producer Groupe Danone announced earlier this week that it had entered into an agreement with soft drinks giant Coca-Cola for the production, marketing and distribution of Danone's retail bottled spring and source water business in the United States. In an interview with French daily Les Echos on Tuesday, Franck Riboud, CEO of Groupe Danone quickly denied accusations that developments with Coca-Cola were a sign of Danone's defeat in the US water market.
"It is an illustration of the group's capacity to react - we are not obstinate and proud in an American market that has deeply changed.
Today, the market is totally different to five years ago, when we launched Dannon Water. The agreement with Coca-Cola will help us find a strong growth pattern again."
The deal gives Coca-Cola a 51 per cent stake in a joint venture company which will market the water brands. The remaining 49 per cent will be held by Danone.
"Coca-Cola paid $128 million in cash, and has opened up distribution channels that were unavailable to our brands," emphasised Riboud.
Any rumours that the agreement with Coca-Cola was a just a step towards giving the soft drinks group total control of the brands were hotly denied. "Coca-Cola does not have the option to acquire the balance of the joint venture, and the objective of Groupe Danone is to participate in the future growth and benefits obtained from this partnership," Riboud added.