(Note: I posted this from my morning Chicago Tribune news site. I doubled
checked with BevNet's news link before I posted this message. This news was
not posted prior to this post. Thanks )

Coke pays $715M to distribute Dr Pepper

June 7, 2010

ASSOCIATED PRESS
ATLANTA (AP) — The Coca-Cola Co. says it will distribute certain drinks made by Dr Pepper Snapple Group Inc. as part of a $715 million deal.

The agreement was announced Monday morning.


Under the terms of the deal, Coca-Cola will distribute Dr Pepper and Canada Dry ginger ale in the U.S. It will also distribute drinks in Canada. Dr Pepper Snapple gets a one-time $715 million payment from Coca-Cola.

The beverages have been distributed by Coca-Cola Enterprises Inc., which Coca-Cola is acquiring. Monday’s agreement replaces an established deal between Coca-Cola Enterprises and Dr Pepper.

The new agreement will last for 20 years and includes renewal options.

As part of the deal, Dr Pepper and Diet Dr Pepper will be included in Coke’s new freestyle fountain dispenser.
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Thoughts?
It will be nice to get a DP from a Free Style fountain.

I wonder if this will spur Pepsi to come up with a Dr. Pepper knock off?

For Pibb drinkers, that kinda sucks that it will be "Kicked out" of the Freestyle.

Originally Posted by Dewman1979

I wonder if this will spur Pepsi to come up with a Dr. Pepper knock off?

Lord knows they need to. I suppose it's kind of hard though with so many Pepsi bottlers selling Dr. Pepper. They do represent about 38% of all DP volume.

The clear winner in both the PBG/PAS and CCE buyout is Dr. Pepper Snapple Group. They pretty much determine the share leader by being on either a Coke or Pepsi truck. Now they also get a stronger foothold in the foodservice channel. DPSG CEO Larry Young really has it together right now.

Originally Posted by Dewman1979

I wonder if this will spur Pepsi to come up with a Dr. Pepper knock off?

Just thinking maybe Dr Wham might get rolled out?

Dr. Wham is the closest thing to Dr Pepper that I've tasted, but doesn't it belong to Buffalo Rock Beverages?

Having Dr Pepper in the Freestyle probably means that the Freestyle probably won't have Pibb, and that's unfortunate.

I can't help but wonder what the long-term plans are at DPSG. The deals with Coke and Pepsi have given them a cash infusion and they'll get a good stream of money by selling the Dr Pepper concentrate. However, they will be depending on their top rivals to sell their top product. How do they plan to grow? Will they use some of that money to buy some of the smaller, independent bottlers and distributors that they depend on for their drinks? Are there any other possible acquisition targets for them?

What about bringing back Dr Slice - never tried it but...

Why would Coke or Pepsi want to sell/distribute their competitors' products? Particularly when DP/Snapple has been gaining market share at the expense of , both, Coke and Pepsi...

Interesting to note here is that the deal only includes Dr Pepper where CCE has it, as well as Canada Dry in the Northeast. Which means that Coke is relinquishing rights to Schweppes, which it sells in some major markets in the south; Squirt, which is a big seller for CCE out west; Cactus Cooler, which is a smaller brand mainly sold by Coke in a few select markets in the west as well; and Canada Dry in places like Ohio/western PA (not sure where else CCE has it).

The push for more DP fountain access in local accounts, as well as the freestyle are both big wins for DPS.

It will be interesting to see what becomes of Seagram's - since Coke owns the master distribution rights to the name for their ginger ales and mixers - I assume Coke will start producing it in places like Atlanta and Cincinnati, and will probably buy out the contracts of smaller distributors (I believe there is one in West Memphis, AR). I assume PBC is going to or already has dropped it in eastern OH.

And what of Fanta Grapefruit? Will Coke now push that in their soon to be former Squirt territories? There was some talk of CCE bringing back Ruby Red in some markets, I guess that's going to be scrapped.

Lastly, I would hope that DPS will push Cactus Cooler as more than just a marginal regional brand.

It's interesting to see how this is playing out for DPSG. You do have to wonder about their long-term strategy. I don't know enough of the "politics" side to really offer an opinion, but from a perception standpoint, that organization has been doing a lot of what appears to be "good stuff" in the past few years.