News briefs: Diageo, PepsiCo and Cott

By Neil Merrett

- Last updated on GMT

Related tags Diageo Soft drink

This week, Diageo's Korean operations receive a boost, PepsiCo may
look to improve ingredient sourcing for its Indian operations, and
Cott hopes to maintain shelf space at Wal-Mart's US stores.

Diageo import license reinstated Diageo, one of the world's leading spirits manufacturers, has had its license to import its own brands into Korea reinstated as of yesterday.

The company will now be able to takeover importing its products into the country from Sooseok, which had acted as a third party distributor following the Korean government's decision to revoke Diageo's license last year.

Diageo says that it expects its operations within Korea to be fully operational by 3 March this year as a result of the decision.

Stocks of its products previously sold to Sooseok after losing the license will now be transferred back to the company, Diageo said.

As a condition of the new deal, the company said that local authorities had required at least 50 per cent of its scotch whisky output bound for Korea to be bottled in the country.

Diageo said it intended to consult the industry and authorities about this condition.

The company announced that it had lost its import license in the country back in June after Korean tax authorities alleged the company had been dealing with unlicensed wholesalers.

Losing its Korean import license was seen as a major blow to Diageo, with the country estimated to be the world's fourth largest market for the lucrative whisky segment.

PepsiCo investigates Indian sourcing In a bid to streamline its operations in the burgeoning Asian market, soft drink and snack manufacturer PepsiCo hopes to step up local sourcing of raw materials in India, according to news reports.

The group's Indian subsidiary is expected to strengthen its domestic supply of fruit concentrates in a bid to reduce the company's reliance on imports and, in the longer term, become more export competitive says a report by the India-based newspaper, The Economic Times.

Pepsico India's Abhiram Seth told the paper that demand for juice-based drinks in the country was up increasing by a rate of more than 25 per cent, reflecting the need to increase its domestic capabilities for the segment.

Seth added that the company imported the majority of juice concentrates like for a number of fruits excluding like Mango and Guava, but hoped that by cutting imports, the group could be a important source of the products for other markets in Asia and the middle east, the report said.

Cott open Wal-Mart shelf-space consultation Cott, a leading manufacturer of private label and branded soft drinks, said that it has not given up hope of reversing a decision by retailer Wal-Mart to reduce shelf space at its stores in the country.

The manufacturer confirmed this week that it had received notice from Wal-Mart about the reductions, which it claimed would severely hurt sales of its brands, which include the Sam's choice label.

However, the group said it still hoped to renegotiate the deal before it was finalised.

"Conversations between Cott and Wal-Mart are on-going and the final outcome of the 2008 merchandising, shelf allocation and other support programs for Sam's Choice carbonated soft drinks at Wal-Mart has yet to be determined," the group stated.

"Regardless of the outcome, Cott will work hard to continue to diversify its customer base and to offset the potential impact on its profitability."

The company announced last month that it had entered into an eight-year lease agreement that would grant it state of the art water bottling capacity to tap into the market for healthy and environmentally sustainable beverage alternatives.

Cott said the 2007 financial year had proved to be the most difficult in the group's history, as rising commodity costs and declining sales of carbonated beverages hit its margins hard.

Related topics Manufacturers Diageo PepsiCo

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