Analysis - Coca-Cola Co, PepsiCo should target sell-offs
Could Coca-Cola Co and PepsiCo target divestments in 2014?
In a note to clients late last week, Bernstein Research recommended that both soft drinks companies sell off their North American bottlers in the coming years. Such a move was described by the analyst as "likely... as long as pricing is not competitive and CSD volumes don't decline faster".
As well as its bottlers in North America, Coca-Cola may still sell its German bottler to Coca-Cola Enterprises, Bernstein suggested, although CCE has not yet taken up its option to buy the division.
PepsiCo, meanwhile, would benefit from a split of its global snacks operations, as the unit provides "faster growth" and is a "better business than beverages".
"We believe that more focused management, execution, and capital allocation generally could generate additional value for investors longer-term," said Bernstein of Coca-Cola and PepsiCo, as well as several US household & personal product companies. "Additionally, strategic buyers that can extract more value from divestments (ie, through greater synergies, local scale, and expertise) may be able to pay premium valuations and enhance the overall benefit to shareholders."
Since 2008, the analyst said, Coca-Cola has made 28 acquisitions and 16 divestments, the most notable being its stake in Mexico's Grupo Continental for US$2.3bn in 2011. PepsiCo, meanwhile has made 21 purchases and 16 sales in the last five years, with China Bottlers (Hong Kong) Ltd to Tingyi last year generating $600m.
In this month's look at sustainability issues in the drinks industry, Ben Cooper argues that, however much has been done in the past in this arena. there is always more that can - and should - be done...
The Marley Beverage Company (MBC) has appointed a former Red Bull, Diageo and PepsiCo executive as its new president and CEO. ...
Nestle Waters has unveiled a new UK TV ad campaign for its Buxton Natural mineral water as part of a GBP2m (US$3.37m) brand investment....
- Diageo Q4 & FY - Preview
- Is Diageo approaching its "Et tu, Brute" Moment?
- Has Diageo added Beer to its 'Non-Core' List?
- SABMiller, Carlsberg, Heineken: Poland's beer itch
- Diageo, Heineken and NBL in South Africa & Namibia
- NPD: Tomatin Contrast, Cù Bòcan
- Diageo, Heineken end South Africa, Namibia JV
- Diageo comm's director latest to leave
- Diageo hit by SEC investigation in US
- Pernod launches pomegranate whisky drink
- Global gin insights - market data, product innovation and consumer trends research
- Global rum insights - market forecasts, product innovation and consumer trends research
- Global Tequila insights - market forecasts, product innovation and consumer trends research
- Global cachaca insights - market data, product innovation and consumer trends research
- Global non-Scotch whiskies insights - market forecasts, product innovation and consumer trends research