just-drinks.com editor's weekly highlights
In This Issue...
The soft drinks industry has not been far from the headlines in recent months. With school bans, restrictions on advertising and growing demand for healthier products, soft drinks has kept us busy.
Last week’s announcement that Cadbury Schweppes is looking to split its beverage operations in the US from its global confectionery business has once again put the industry back on the front page.
Cadbury’s Americas Beverages division has been moulded into a pretty slick-running machine. Last year, the unit, which has operations in the US, Canada and Mexico boasted revenues of GBP2.6bn (US$5bn), an increase on the GBP1.8bn delivered a year earlier. With brands like Dr. Pepper and 7-Up in the stable, Cadbury succeeded in growing carbonates sales in the US, grabbing a sliver of market share from Coca-Cola Co. and PepsiCo.
Unlike the global brewing industry, the gap between the really big players and the next level of companies in soft drinks is really quite vast. Cadbury certainly leads this chasing pack, but it’s difficult to see what this move means for that status.
As one analyst told just-drinks last week, it seems unlikely that a buyer for the unit will come from within the soft drinks trade. Pepsi and Coca-Cola would not get past the regulatory authorities, and no other company has the money – that’s the gap for you.
So, with private equity looking like the most probable source for a buyer, it’s going to take decades rather than years for the power base to shift.
In the meantime, however, the column inches will still be plentiful.
For further analysis of Cadbury Schweppes’ announcement, click here.
Until next time...
Olly Wehring, Managing Editor
The announcement that Cadbury Schweppes is looking to split its beverage operations in the US from its confectionery unit may be music to its investors' ears, but where will a potential buyer come from? Dean Best looks at the move, and weighs up what the coming year has in store for Cadbury Schweppes.
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