Coca-Cola grabs Dr Pepper-Snapple rights

Posted by Nicole Eckersley on 11th June 2010

Coca-Cola drink fountainA new agreement will see The Coca-Cola Comapny distributing several of the Dr Pepper Snapple Group’s brands, subject to the completion of The Coca-Cola Company’s acquision of Coca-Cola Enterprises North American bottling group.

The one-time cash payment of $715 million will secure Coca-Cola the right to distribute DPS brands in the US and Canada that are currently distributed by CCE, including Canada Dry, C’Plus and Schweppes.

In addition, Coca-Cola will add Dr Pepper and Diet Dr Pepper to the new Coca-Cola Freestyle touchscreen soda fountain for 20 years. DPS’s investment in the dispenser is estimated at US$115 million to $135 million.

The Coca-Cola Freestyle dispenser has the capacity to dispense more than 100 beverages in the same amount of space as a standard eight-valve machine. In development for more than four years, the units offer consumers a wide variety of branded waters, juice drinks, and sparkling beverages.

The dispenser has already been rolled out to more than 20 customers in select locations, and the Coca-Cola Company plans to extend its pilot to include another 500 machines in the next few months.

“We are pleased to have reached a fair and mutually beneficial agreement with Dr Pepper Snapple Group to continue distributing their brands, marking yet another key milestone in our acquisition of the North American operations of Coca-Cola Enterprises,” said Muhtar Kent, chairman and chief executive officer, The Coca-Cola Company. “Importantly, this agreement aligns with our 2020 Vision of more than doubling our system revenue while increasing our system margins by leveraging the world’s most powerful distribution network.”

The closing of the CCE acquisition is expected to occur in the fourth quarter of this year subject to, among other things, regulatory and CCE shareholder approval.