Cadbury Schweppes to Spin off Beverage Unit

March 1, 2007
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Cadbury Schweppes to Spin Off Beverage Unit

Cadbury Schweppes announced that it intends to separate its confectionery and Americas Beverages businesses. In a statement, company Chairman John Sunderland said: "This decision is of great significance for the board and the company. It has been facilitated by acquisitions and disposals over the last decade designed to create a strong and potentially independent Americas Beverages business. In the same time, we have built the world's largest confectionery business. We believe now is the moment to separate and give both management teams the focused opportunity to extract the full potential inherent in these excellent businesses."
A possible spin-off has been anticipated since Cadbury already has divested most of its beverage businesses outside of the United States. It sold its beverage holdings in Europe, Syria and South Africa last year. The company says the time is right to spin off the American business after improving its distribution and brand performance.
“We have actively sought to significantly improve the performance of our business in the Americas over the last three years, first through restructuring and then by a focus on core brands,” the company said. “This culminated in 2006 when we secured and strengthened our route to market through the acquisition of several of our third party bottlers (including Dr Pepper/Seven Up Bottling Group).”
The company said it will announce more specific plans for separating its businesses during its June financial update.
CCNA to re-organize
Coca-Cola North America will change its organizational structure into three units: sparkling beverages, still beverages and emerging beverages. Sandy Douglas will continue leadership of the North American division. The emerging beverage division will be led by Deryck van Rensburg who formerly headed Coca-Cola’s Germany division. The still beverages unit will be headed by Brian Kelley, who previously as chief executive officer of SIRVA, a relocation company. The company had not named a leader for the sparkling beverage division at presstime.
“We believe the reorganization is a move by The Coca-Cola Co. to address the tough operating environment ahead for its North America region as well as a move to address CCE’s desire for additional innovation in the non-carbonated beverage category,” said Citigroup Wall Street analyst Bonnie Herzog, in a report.
“The creation of a new emerging beverage division allows [Coca-Cola] to be more nimble on product innovation and acquisitions,” she added.
Coca-Cola also reached an agreement last month that will end the lawsuit filed by some of its bottlers over warehouse distribution of Powerade. The agreement calls for the company to work with the bottlers to develop and test new customer service and distribution systems to supplement the direct store delivery system.
“Our bottling system is our heritage and it will be the foundation of our future growth,” Douglas said. “The partnership with our bottlers is what makes the Coca-Cola system powerful and unique, and we will work diligently to ensure that we move forward and succeed together. One of the historic strengths of our system has been its ability to change and adapt as our consumers, customers and competitors have changed. By working together on new customer service and distribution systems, we will ensure that our systems second century is as bright as ever.”
Nestlé enters the Magic Kingdom
Nestle’s Nesquik products will now be included in the healthy eating initiative the Walt Disney Co. unveiled last fall. Restaurants at the Disneyland Resort will offer Nesquik Chocolate and Strawberry 100 percent flavored milk, water, 100 percent fruit juice or plain low-fat milk as beverages with kids’ meals.
“We’re proud to be a part of Disney’s steps toward better nutrition for kids,” said Cathy Dean, marketing manager for Nestle Nesquik RTD. “We share Disney’s commitment to providing healthier options for children and families, whether at school, on vacation at Disneyland, or on the go.
“We introduced the 8-ounce package in June 2006, specifically to provide portion options for parents and kids,” she added. “As the leading brand of flavored milk with 85 percent of national branded sales, we want to help our customers by providing options for a balanced lifestyle.”
In Disney’s initial tests involving 20,000 kids’ meals, as many as 90 percent of parents and children stayed with more nutritious food and beverage options, the company says.
Spanish court denies Bacardi’s rights to Havana Club
Bacardi was denied the brand ownership claim to the Havana Club trademark by the Provincial Court of Madrid, Spain. The recent ruling by the appeals court stemmed from Bacardi’s 1999 complaint petitioning for recognition as owner of the trademark for Havana Club rums in Spain. Cuban-based Havana Club International, which is affiliated with Pernod Ricard, holds the Havana Club trademark for Spain and many other countries.
Bacardi filed the complaint because it had purchased the rights to the Spanish Havana Club trademark from former shareholders of JASA, a Cuban company that had registered a Spanish trademark in 1935, but had not renewed or used the brand name in Spain. Havana Club International, which was formed by a partnership between Corporation Cuba Ron S.A. and Pernod Ricard in 1993, markets dark aged rums in Spain under the brand name.
The court also ruled using “Havana” or other Cuban terms for a non-Cuban product would mislead consumers regarding the product’s origin. Bacardi launched Havana Club rum, made in Puerto Rico, in the United States in September 2006.
IBWA teams with Pack Expo
The International Bottled Water Association (IBWA), Arlington, Va., announced it will hold its 2007 Convention and Tabletop Trade Show in conjunction with Pack Expo 2007. The IBWA Convention and Show will be held Oct. 15-19 at the Las Vegas Hilton Hotel adjacent to the Packaging Machinery Manufacturers Institute’s Pack Expo show.
Its new Tabletop Trade Show will debut this year and will provide the same networking opportunities as past events, but in a more intimate atmosphere. The convention also will provide an expanded seminar program to educate bottled water professionals on innovative technologies, processes, marketing and sales techniques as well as industry trends. IBWA attendees will receive complimentary access to Pack Expo, which also is co-located with Process Expo and the Converting and Package Printing Expo (CPP).
The association also released an Emergency Response Directory, which is a list of organizations and government agencies responsible for emergency and disaster response activities.
The directory is a resource for IBWA members and other interested parties to find the proper national, regional, state and local groups to provide bottled water and other resources to those in need during an emergency. It was created by the association’s Emergency Clearinghouse Working Group, which was founded in 2005 following Hurricanes Katrina and Rita, and can be downloaded from on the IBWA Web site, www.bottledwater.org
Absolut on the market
The Swedish government is putting Absolut Vodka up for sale after nearly 90 years of ownership. The estimated price of Absolut-maker V&S Vin & Sprit is $5.7 billion, according to reports, and companies such as Bacardi have expressed interest in acquiring the brand.
The sale of Absolut is thought to be driven by the perception of conflict between state ownership of a liquor brand in a country that closely controls alcohol sales.

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