Coke settles $715m distribution rights for Dr Pepper as bottling takeover looms

By Oliver Nieburg

- Last updated on GMT

Related tags Coca-cola company Coca-cola

Coke settles $715m distribution rights for Dr Pepper as bottling takeover looms
The Coca-Cola Company has agreed a $715m (€600m) lump sum with Dr Pepper Snapple Group (DPS) to distribute certain brands subject to the acquisition of the North American branch of Coca-Cola Enterprises (CCE) expected in the fourth quarter of this year.

The agreement would give the Coca-Cola Company the right to distribute Dr Pepper brands and Canada Dry in Northeast US and the power to sell Schweppes, Canada Dry and C’Plus in Canada.

Substitute previous deals

A 20-year license agreement would replace the existing contract between DPS and CCE in a deal that Coca Cola Company CEO, Muhtar Kent, described as “a key milestone in our acquisition of the North American operations of Coca Cola Enterprises.”

“Importantly, this agreement aligns with our 2020 of more than doubling our system revenue while increasing our system margins by leveraging the world’s most powerful distribution network,” ​he added.

Reclaiming CCE after losing its bottle

The Coca-Cola Company relinquished control of its bottling operations in 1986 in a bid to cut costs in preparation for a global brand expansion.

In February, Coke began negotiations with CCE to recover the bottling circulation network in North America, after chief rival PepsiCo moved to acquire its two largest bottlers in August last year. Analysts believed the change in bottling strategy revealed how the value of branding had decreased but the importance of developing new products to meet ever-changing consumer preferences had increased.

CCE stand to gain bottling operations in Norway and Sweden as well as a majority interest in the Coca-Cola Company’s German bottler under the proposed takeover. Coke said the deal would allow it to consolidate North American bottling practices into four business components :(1) CCE North America; (2) CCNA Foodservice; (3) the Minute-Maid/Odwalla Juice business; and (4) CCNA Supply Chain Operations.

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