Coke weighs bid for Snapple

From Reuters

Coca-Cola Co. is evaluating whether to make a bid for Snapple, the bottled tea maker that is owned by Cadbury Schweppes, 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 is of interest to us or whether we can do it on our own,” he said in an interview Wednesday.

London-based Cadbury, the world’s largest confectionary company, is getting ready to separate its U.S. drinks division, probably through a sale. The division includes Snapple, Dr Pepper, 7UP and Hawaiian Punch.

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 Atlanta-based Coke by accelerating its efforts to expand its offering of healthful drinks, juices and waters.

Isdell rejected the notion that the market for carbonated soft drinks such as Coke was declining, 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% to 4% in volume and 6% to 8% in operating income.

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

The Coke CEO has led a drive to expand the company’s offering of noncarbonated drinks, which included a $4.1-billion takeover this year of Glaceau, the maker of Vitaminwater.

Snapple, which sells flavored tea, lemonade and juice drinks, is one of the world’s largest bottled tea brands. Its offerings exceed those of Coke’s entire tea portfolio, which includes Nestea, Gold Peak and recently acquired Fuze, according to recent Beverage Digest data.

Isdell was in Geneva for a United Nations meeting of business leaders, government ministers and others 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 communities in emerging markets, and has been an outspoken advocate of the U.N. compact.

The 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.