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Issue Date: Vol. 50, No. 6, June 2010, Posted On: 6/11/2010

Coca-Cola, Dr Pepper Reach Distribution Agreement

Emily Jed
Coca-Cola Co., Coke, Dr Pepper Snapple Group Inc., Dr Pepper, Dr Pepper bottling, Dr Pepper distribution, Pepsi, Freestyle fountain, vending machine, vending

PLANO, TX -- Coca-Cola Co. agreed to pay $715 million for the rights to distribute some of Dr Pepper Snapple Group Inc.'s most popular brands. The deal will commence on completion of Coca-Cola' proposed acquisition of Coca-Cola Enterprises' North American bottling business.

As part of the agreement, Dr Pepper and Diet Dr Pepper will be the only non-Coke brands included in the beverage giant's new high-tech Freestyle machine, a touchscreen fountain dispenser that offers more than 100 different flavors. DPS values that placement at $115 million to $135 million, sweetening the deal. Atlanta-based Coke will also offer Dr Pepper beverages in local fountain accounts currently serviced by CCE.

The agreements, which have an initial term of 20 years, allow Coca-Cola to distribute Dr Pepper nationwide and Canada Dry in the Northeast, where the brands are currently distributed by CCE. Coca-Cola will continue to distribute Canada Dry, C'Plus and Schweppes in Canada.

In certain U.S. markets where it has a manufacturing and distribution footprint, DPS will begin selling Squirt, Canada Dry, Schweppes and Cactus Cooler, which are currently sold by CCE.

Dr Pepper's unique bottling arrangement relies on distribution by rivals Coke and Pepsi for most of its sales volume. Dr Pepper renegotiated its distribution contracts with Coca-Cola and PepsiCo Inc. after both companies agreed to buy bottlers. PepsiCo paid $900 million this year for 20-year rights to distribute some Dr Pepper drinks.

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