Coca-Cola to distribute certain Dr Pepper Snapple drinks as part of $715 million agreement

Monday, June 7, 2010

Coke pays $715M to distribute Dr Pepper

ATLANTA — The Coca-Cola Co. will pay $715 million to Dr Pepper Snapple Group Inc. for the rights to distribute Dr Pepper and Canada Dry in the U.S. after Coke acquires its largest bottler.

Coca-Cola also will distribute Canada Dry, C’ Plus and Schweppes in Canada.

Those drinks have been distributed by bottler Coca-Cola Enterprises Inc., a separate company that Coca-Cola is acquiring. That acquisition is expected to be finished in the fourth quarter.

Monday’s agreement between Coke and Dr Pepper replaces an established deal between Coca-Cola Enterprises and the beverage maker, which is based in Plano, Texas.

The new agreement will last for 20 years and includes renewal options and makes the company Dr Pepper’s largest distributor, with about 42 percent of its business.

Rival PepsiCo Inc. has 39 percent, and independent bottlers distribute the remaining 19 percent, officials said Monday.

As part of the deal, Dr Pepper and Diet Dr Pepper will be included in Coke’s new Freestyle fountain dispenser, which can mix more than 100 drinks.

Dr Pepper paid Coca-Cola between $115 million and $135 million to be the only non-Coke product on the high-tech dispenser, which is expected to be in 500 locations by the end of the summer.

In December, Dr Pepper inked a similar deal with Pepsi for $900 million. Both Coca-Cola and PepsiCo are trying to gain more control over their bottlers and distributors, hoping to get new drinks on shelves more quickly to keep up with changing tastes.

Coca-Cola shares fell 13 cents to $51.14 in morning trading. Dr Pepper shares dipped 27 cents to $36.22.

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