Coca-Cola Mulling Snapple Bid

Published July 05, 2007

| Reuters

Coca-Cola Co. (KO) is evaluating whether to make a bid for Snapple, the iced tea division owned by Cadbury Schweppes Plc (CSG), as part of Coke's push into tea-based drinks, Coke Chief Executive E. Neville Isdell told Reuters.

"That is a valuation that we undertake -- whether it (Snapple) is of interest to us or whether we can do it on our own," he said in an interview on Wednesday.

Coke also aims to expand its palette of tea-based drinks using a revived pact with Nestle and recently met with officials from the Coke-Nestle joint venture, Beverage Partners Worldwide, to advance their plans, Isdell said.

"You're going to see more value-added products from the tea platform," he said.

New products with Nestle or a possible tea acquisition from Cadbury would serve Coke by accelerating its efforts to expand its offering of healthy drinks, juices and waters.

Isdell rejected the notion that the market for carbonated soft drinks like Coke was in secular decline, and pointed to the quick rise in market share that followed the rollout of the group's new beverage, Coke Zero -- billed as the company's most successful brand launch in 20 years.

When asked what Coke Zero would do to the group's published growth targets, Isdell said, "It will help it. I'm not going to give you a new prediction but it will help it."

Coke last said it expected long-term growth of 3 percent to 4 percent in volume and 6 percent to 8 percent in ongoing currency-neutral operating income.

Coke Zero had already grabbed market share of 3-5 percent for carbonated soft drinks in key markets such as France, Germany and Japan, Isdell said.

ALTERNATIVE PUSH

Isdell was in Geneva for a United Nations meeting of business leaders, government ministers and key civil society groups to review the U.N. Global Compact for corporate citizenship, in which Coke has played a leading part.

Isdell has led efforts to lower water consumption, recycle and reduce packaging, cut energy use and establish closer ties to local communities in emerging markets, and has been an outspoken advocate of the U.N.'s Compact.

He has also led a drive to expand the group's offering of noncarbonated drinks, which included a $4.1 billion takeover of vitaminwater maker Glaceau earlier this year.

Snapple, which sells flavored teas, lemonades and juice drinks, is one of the world's largest bottled tea brands, ahead of Coke's entire tea portfolio which includes Nestea, Gold Peak and recently acquired Fuze, according to recent Beverage Digest data.

British-based Cadbury, the world's largest confectionary company, is getting ready to separate its drinks arm, which includes Dr Pepper, 7UP, Snapple and Hawaiian Punch.

Beverage Partners Worldwide, a 50-50 joint venture between Nestle and Coca-Cola, was created in 2001, following a period of 10 years during in which Nestle and Coca-Cola cooperated in a joint venture called Coca-Cola and Nestle Refreshments.

The Global Compact was created in 2000 as a counterweight to anti-globalization protests, such as those that disrupted the 1999 World Trade Organization meeting in Seattle.

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