Israeli drinks merger mulled

Coca-Cola Israel is thought to be mulling a merger with the Israeli arm of the Carlsberg brewing group and the local wine co-operative Carmel Mizrahi, according to a report from Globes Online​.

Coca-Cola Israel is said to be interested in merging its Central Bottling Company unit with Israel Beer Breweries, the Israeli licence holder for Carlsberg beer and also controlled by the soft drink group, and then merging that combined group with the wine co-op.

Globes reports that the two companies would be 50-50 partners in the new joint venture, and that Carmel Mizrahi would have to change from an agricultural co-operative to a limited company. At present, Carmel is owned by independent vintners (75 per cent) and the Jewish Agency (25 per cent), the report said.

While Coca-Cola Israel declined to comment on the report, Globes said that the soft drink group had confirmed that it was looking to enter the wine market as part of its overall strategy of expanding its presence in every segment of the drinks market.

There could be some changes in distribution if the deal goes ahead, according to the Globes report. Coca-Cola Israel also owns the rights to a variety of Diageo brands in Israel, and these are currently distributed through Carmel's rival, the Golan Heights Winery. It is unlikely that this arrangement would continue if Carmel joins forces with the soft drinks maker.

The merger would also help alleviate the problems at Carlsberg Israel, whose sales have been hit in recent years because of a decline in tourism following the terrorist attacks. The company is the second largest player in the Israeli beer market, according to Globes, with a 31 per cent share behind Tempo, which is the Heineken licence holder.