As private equity groups circle the Cadbury Schweppes soft drink portfolio, the Coca-Cola Co. is considering trying to grab a well-known Cadbury brand for itself.
Coke Chairman and CEO E. Neville Isdell told the Reuters news agency yesterday that his company has made entreaties about buying the Snapple line of teas and juice drinks from the two groups of private equity companies bidding on the soon-to-be-spun-off drinks side of Cadbury Schweppes.
Speculation about the fate of Cadbury’s soft drink brands, which include Snapple, Dr Pepper, 7-Up, Mott’s, Diet Rite and other well-known product lines, has been slowly building since activist shareholder – and former Snapple owner — Nelson Peltz pushed the company’s board to split the drinks business off from its candy holdings.
The acquisition of Snapple, a well-known new age beverage company whose strongest brands include iced teas and lemonades, would appear to be a significant block in the rebuilding of Coke as a total beverage company. Coke’s Nestea-led iced tea portfolio has lagged behind Snapple, PepsiCo’s Lipton, and Ferolito, Vultaggio’s AriZona brands in recent years, and last year’s launch of a slightly upscale brand, Gold Peak, has seen underwhelming results.
Indeed, before Snapple became a possibility, there had long been hints that Coke was eyeing AriZona for a buyout or a partnership, and Coke bottler CCE began to distribute some AriZona products last year, which was considered by some a significant step in that direction. But AriZona owner Don Vultaggio has made it clear that he’s not likely to sell anytime soon.
Coke, meanwhile, has made two major purchases so far this year, purchasing both the new age beverage company Fuze and Vitaminwater maker Glaceau, and has also agreed to distribute Campbell’s V-8 brands, as well.
It is not clear how Coke would work the deal yet, if one could be made – the company could try to join one of the equity firms, or have an agreement in place pending the sale of the entire drinks portfolio to one of the bidders.
Initially, three groups of bidders were looking at Cadbury Schweppes soft drink brands, but it appears an early effort from Cott Corp., which makes private label soft drinks, is on the wane. A decision on the bids is expected by the end of the month, according to the Wall Street Journal.