Coca-Cola may buy Snapple
New York, June 23, 2007
Coca-Cola may be interested in acquiring Cadbury Schweppes's Snapple iced tea, a trade publication reported.
Citing several Coke system executives, Beverage Digest reported that 'Coke might be interested -- or in words of some, should be interested -- in buying Snapple to beef up its tea business.'
Snapple, which sells flavoured teas, lemonades and juice drinks, was the third-largest bottled tea brand in the first quarter, ahead of Coke's entire tea portfolio which includes Nestea, Gold Peak and recently acquired Fuze, according to Beverage Digest data.
Coke spokesman Ben Deutsch declined to comment.
'Coke still needs to do work on its North American tea portfolio,' said Beverage Digest publisher John Sicher. 'Snapple, though it hasn't been growing recently, could make sense for Coke but there's no indication yet that the brand is for sale.'
Cadbury, the world's largest confectionary company, is getting ready to separate its drinks arm, which includes Dr Pepper, 7UP, Snapple and Hawaiian Punch.
Earlier this week, chief executive Todd Stitzer said a sale of the $15.9 billion (8.46 billion pounds) North American business was more likely than a spinoff.
Sources familiar with the situation have said at least two groups of private equity firms were bidding for the business.
Private equity firms generally fund their purchases with a lot of debt, and often sell off underperforming units to help pay some of it down.
A Cadbury Americas Beverages spokesman said one of the strengths of Cadbury's drink business was its diverse portfolio.
'As consumers are looking for flavours and variety and alternatives to carbonated soft drinks, our portfolio makes us well-positioned with brands like Snapple, Mott's and Hawaiian Punch,' said Cadbury spokesman Charles Alfaro.
Bolstered by its strength in flavoured soft drinks, Cadbury Schweppes saw its soft drink sales volume grow 1.3 per cent last year in the US, outperforming Coke and PepsiCo, both of which declined. Reuters