Pepsi wins a battle in the Cold (drinks) War
In the global war for non-alcoholic drink hegemony, Coke and Pepsi duke it out on many fronts. If we look at the ground forces (the core area of carbonated beverages), Coke is the dominant player, both in the US and worldwide. But Pepsi dominates the realm of so-called New Age beverages, from bottled water to sports drinks to juice. With Cadbury-Schweppes fading out of the picture, the grab for world dominance is being fought country by country, beverage by beverage.
This week, PepsiCo announced that they had agreed to buy Ukrainian juice manufacturer Sandora LLC, a deal worth $542 million. Sandora sells around half of the juice in a growing Ukrainian market. Even more significant, the runner-up for the business was Coca-Cola.
The Wall Street Journal story ("PepsiCo, PepsiAmericas to Buy Ukrainian Juice Maker Sandora", 6/7/2007) put it;
The Sandora deal hands rival Coca-Cola Co. a setback as the two soft drink giants race to build up their noncarbonated drinks businesses as consumers turn away from soda to healthier beverages.
This is hardly Pepsi's first foray into central and eastern Europe. Last year it bought out QAB, a leading bottler in Romania. In 2005, it bought German juice maker Punica Getraenke.
Meanwhile Coke bought Russian juice producer Multon and Serbian bottled water company Vlasinka in 2005. In 2006, it bought Serbia's Fresh & Co. juice firm.
Coca-Cola has focused in on Eastern Europe as a key growth area in recent months, buying up Russian juice producer Multon and also Serbia's number two bottled water firm, Vlasinka.
Back on the home front, Coca-Cola announced it would buy US-based Energy Brands (Glaceau), an enhanced water company. In February, it bought US-based Fuze Beverage which manufactures various health drinks, including one called WaterPlus. Coca-Cola also announced an agreement to resell Campbell Soup Company's V-8 juice in North America.
In response, PepsiCo has bought US-based Izze Beverage, a maker of sparkling fruit juices, and Naked Juice, a maker of natural juice products, both in 2006. And it promised it has more buys in the pipeline.
The game of swallowing up innovators, potential competitors, and small market dominators goes on unabated, both vertically in the UYS market and horizontally in the international market.
