Coke bottler explores functional milk deal

By Chris Mercer

- Last updated on GMT

Related tags Coca-cola

Coca-Cola, hit by a slow-down in fizzy drinks sales, may be looking
to expand into vitamin-enriched milk after the firm's bottling arm
announces talks to buy control of Bravo! Foods.

Coke's biggest bottler, Coca-Cola Enterprises (CCE), is negotiating a distribution agreement with Bravo!, producer of vitamin-fortified, flavoured milk 'slammers'.

The proposed deal would allow CCE to buy up more than half of Bravo!'s shares and gain exclusive distribution rights on all current and future Bravo! products in the areas that CCE already distributes Coca-Cola products, including North America.

The move has sparked new speculation that Coca-Cola itself may be preparing to jump in alongside its bottling partner.

A spokesperson for Coca-Cola advised caution, saying CCE was only in the early stages of an approach for Bravo!

But, the world's biggest soft drinks firm continues to face problems in its traditional carbonated portfolio, with a slow-down in sales last year recently followed by a one per cent dip in volumes across North America in the first half of 2005.

The problems have been widely blamed on health-conscious consumers rejecting sugar-laden fizzy sodas. As a result, Coca-Cola has openly pursued a greater focus on diet and non-carbonated soft drinks with a raft of product launches, such as the sugar free energy drink, Throttle, and Coca Cola Zero.

The firm has also spent more money on its functional portfolio, especially in the UK where it plans to launch vitamin-enriched soft drink Ipsei and has also been given approval to launch a new, cholesterol-lowering juice.

Coca-Cola has tried unsuccessfully to get into milk twice before over the last few years, but Bravo! appears to be its best chance yet.

The group fits Coca-Cola's R&D priority on functional drinks and has already begun to be established as a brand name among consumers and retailers.

Bravo! Foods' UK subsidiary, Bravo! Brands, recently signed a supply deal with the UK's third biggest supermarket, Sainsbury's. The firm will initially supply 250ml packs of Slammers in chocolate, banana and strawberry flavours, with scope for expanding on this if sales go well.

"With only 1.7g fat per 100ml, Slammers are the natural choice for kids and mums while providing retailers with healthy sales and profit margins,"​ said David Diggens, director of Drink Brokers, the firm appointed to handle UK sales and marketing of Slammers.

Bravo!, for its part, said the prospective deal with CCE would be mutually beneficial for both companies. Until now, Bravo! has spread its wings throughout the US, Mexico and Middle East using regional milk processors, but a deal with CCE could seriously extend its reach.

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