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BRAZIL: Coca-Cola Co drops Nestea for Leao Junior approval

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The Coca-Cola Co has agreed to break ties with the Nestea brand in Brazil, in order to gain regulatory approval for its acquisition of RTD tea producer Leao Junior.

Coca-Cola Co was this week cleared to buy Leao Junior by the Anti-Trust Division of Brazil's Justice, known as CADE.

However, conditions imposed on the approval mean that Coca-Cola can no longer market, distribute or produce Nestea in Brazil.

"As a result, the company will have to cease its involvement with Nestea Beverages in Brazil," a Coca-Cola spokesperson told just-drinks today (19 June). Nestea belongs to Beverage Partners Worldwide (BPW), a joint venture between Coca-Cola and Nestle.

The spokesperson added that the agreement with CADE "does not establish the removal of the line from the market, but rather that Coca-Cola shall cease its involvement with the Nestea Brand in Brazil. BPW is responsible for the future next steps of Nestea."

Coca-Cola Co announced in March 2007 that it intended to buy Leao Junior in 2006. The firm's Matte Leao brand accounted for 45.7% of Brazil's RTD tea market in 2006, while Nestea had a 24.4% share, according to the latest figures available.

After Coca-Cola's announcement, rival drinks group PepsiCo appealed to the authorities, arguing that the deal would hand Coca-Cola too much of the RTD tea market.

Financial details of the deal have not been disclosed.


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