The Pepsi Bottling Group has said it will stop distributing Seven-Up at the end of the year. The company, the largest Pepsi bottler in the US, plans instead to expand its distribution of Pepsi-Cola North America's own lemon-lime soda, Sierra Mist, in all of its US markets from the beginning of 2003. Seven-Up is owned by the UK drinks and sweets group, Cadbury Schweppes, through its Dr Pepper/Seven Up Inc. operation.

While sales of Seven-Up have declined as other lemon-lime brands have gained ground, Dr Pepper/Seven-Up said it was surprised by the decision. "We are surprised by this decision, given the intrinsic value of Seven-Up to Pepsi Bottling Group in the second-largest carbonated soft drinks segment where Seven-Up represents 23% of lemon-lime and Sierra Mist 5%," the company said.

Doug Tough, Dr Pepper/Seven Up president and chief executive officer said: "However, we are entirely comfortable with moving the 7 UP brand into the independent bottling system which will be able to give greater focus to 7 UP."

Around 15% of 7 UP volume is sold via the PBG system. This will now transfer back to DPSU, free of charge, and then be refranchised to independent bottlers.

"Over recent years the independent bottling system has been markedly strengthened through consolidation via the formation of the Dr Pepper/Seven Up Bottling Group Inc., (40% owned by Cadbury Schweppes plc). As one of the two leading lemon-lime brands, 7 UP will further strengthen the independent bottling system," said a company statement.

"This happened before in the mid 1990s, when several of our brands were dropped by cola system bottlers," explained Tough. "The two key brands, A&W Root Beer and Sunkist, were then refranchised into the independent bottling system. These bottler portfolios were strengthened and far greater marketing and promotional focus was given to these brands. Since the transfer both brands have grown substantially and today lead their respective categories, reflecting the benefit of a focused and committed bottling system.

"When bottlers support 7 UP, it has consistently delivered outstanding results. Our key focus will now be to license the brand to maintain our route-to-market, then to build on the brand's 73-year heritage," Tough concluded.

Pepsi Bottling already markets Sierra Mist and Diet Sierra Mist in about 70% of its US regions. At present, Seven-Up accounts for around 2% of its US volumes.

Dr Pepper/Seven Up, which is 40% owned by Cadbury Schweppes, said it will move Seven-Up into the independent bottler network.