Coke bottler signs functional milk rights
distribution deal with functional milk drinks maker Bravo! Foods,
offering Coke a new way to escape stagnant fizzy drinks sales.
The deal, which only covers the US for now, will begin in the fourth quarter of 2005 and includes rights to distribute Bravo!'s wide range of vitamin-fortified and flavoured milk 'Slammers'.
Coca-Cola Enterprises (CCE) will also have the option of taking up a 10 per cent stake in Bravo! for $10.8m (€8.7m). Initial proposals would have allowed CCE to buy up more than half of Bravo!'s shares, but the revised deal still opens a new avenue for the firm.
"Bravo! has a strong line-up of shelf-stable milk products, which we believe will be an excellent addition to our product portfolio," said John Alm, CCE president.
CCE has so far denied speculation that Coca-Cola itself may be preparing to jump in alongside its bottling partner. It is, however, somewhat unusual for CCE to go its own way and some kind of move in the future cannot be ruled out.
The world's biggest soft drinks firm has openly pursued a bigger focus on marketing and developing value-added and healthier soft drinks as its traditional carbonated portfolio has stuttered.
The carbonated division's sales slowed in 2004 and volumes dipped one per cent across North America in the first half of 2005.
As a result, Coca-Cola has made a raft of new non-fizzy and diet drinks launches, including sugar free energy drink, Throttle, and Coca Cola Zero. The firm has also spent more on functional drinks and plans to launch the UK's first cholesterol-lowering juice.
Bravo! may provide a nice extension to this strategy, and Coca-Cola has already tried twice to get in to milk drinks in recent years.
Coke's great rival, PepsiCo, also launched its fortified 'milk chillers' under the Quaker brand in August.
CCE's Bravo! deal now represents a good opportunity for Coca-Cola to enter the sector via a brand name that has already begun to establish itself among retailers and consumers.
"Slammers reinvent traditional milk drinks, providing great tasting, quality milk drinks that can be distributed with limited or no refrigeration," said Bravo! chief executive Roy Warren.
"Slammers are packaged with shelf-stable technology that allows for long shelf life and ambient storage. This advancement allows the Slammers brand to become a serious competitor in the multi-billion dollar 'better-for-you' drink business, which is now the fastest growing segment of the beverage industry."
Bravo! Foods' UK subsidiary, Bravo! Brands, recently signed a supply deal with the UK's third biggest supermarket, Sainsbury's.
