Coca-Cola and Campbell's Juices Expand Distribution
If you're looking for a new juice to drink, consider a can of organic or natural Campbell's juice. The organic variety has more nutritional value than either of the other brands, and three tasters would buy it again. The only downside was that one tester found it tasted slightly burned. However, that didn't keep her from trying it. She liked the flavor and said she'd buy it again.
Coca-Cola North America
The new partnership between Coca-Cola and Campbell Soup Co. will allow Coca-Cola to distribute Campbell's vegetable juices in North America. Campbell is known for its tomato juice. Previously, the company's products were only available in supermarkets, while Coca-Cola was known for its carbonated drinks and fruit juices. However, the new partnership will make it easier for consumers to enjoy both Coke and its own juices.
The partnership between Coke and Campbell's will bring increased competition to the beverages category. However, consumers are turning to healthier beverage alternatives. In addition to increasing demand for healthier options, the two companies are also collaborating to bring Godiva Belgian Blends to North America. The joint venture will also help Coke increase its market share in the U.S., which is expected to contribute 15% of the company's total beverage sales.
The partnership between the two beverage giants will also give Campbell V8 fruit and vegetable juices greater distribution. With this partnership, Coca-Cola North America will be able to sell these beverages in convenience stores, delis, and other retail outlets. The agreement will come into effect in September 2007.
V8 Splash, a $200 million brand, is on track to deliver its seventh consecutive year of growth. The company hopes to expand this brand with more varieties next year and tap the $8.6 billion energy drink market. Additionally, Campbell plans to introduce two new diet varieties next year. A new product, V8 V-Fusion, contains a full serving of fruit and vegetables.
One of the largest growth opportunities for Campbell Soup is in the beverage business. Coca-Cola's largest bottlers have already branched outside of franchise areas to compete with Campbell. They are frustrated with the lack of leadership in non-carbonated beverage sales. Other brands that Campbell has expanded into include Pepperidge Farm baked goods, Prego pasta sauce, and Godiva chocolates. It also has an agreement with Coke to use its Godiva brand name.
Coca-Cola has made a move to diversify beyond traditional soft drinks. Its North American unit has signed a deal to distribute V-8 juice throughout the U.S. and Canada beginning in September. Campbell is known for its canned, frozen, and refrigerated foods, but it will also market and distribute the popular fruit drink in the U.S. as well as Canada. The deal will give Coca-Cola North America master distribution rights for V-8 juice.
The deal will add one cent to 2007 adjusted earnings per share and dilute its 2008 earnings by two to three cents. The deal is not expected to affect PepsiCo's full-year guidance of $1.35 to $1.40 per share. The move comes amid increasing competition in the rapidly growing noncarbonated beverage market. Meanwhile, Coca-Cola has agreed to pay $4 billion for Energy Brands Inc. in an attempt to draw closer to Pepsi.
The company's 100-percent-vegetable "V8" juice has significantly reduced its sodium content to 480 mg per eight-ounce serving. Despite the sodium level, one eight-ounce serving of "V8" is still packed with two servings of vegetables. The beverage contains two grams of fiber, antioxidants, and potassium. Its vegetable cocktail also boasts high levels of vitamin C and vitamin A.
While many consumers would prefer to have a snack that is both delicious and healthy, PepsiCo is making the move to add more nutritious products to its menu. The company plans to reduce the amount of added sugars and saturated fats in its key brands by one-fourth in five years. By 2020, PepsiCo wants to triple its healthy brand revenues to $30 billion.
Coca-Cola and Campbell Soup Co. have announced an agreement to distribute the latter's juices. Coca-Cola North America will distribute Campbell's juices in stores, supermarkets and convenience stores, while Campbell will distribute its tomato juice. Both companies will distribute their juices in single-serve containers. The deal is expected to be completed in the second half of the year. Both companies plan to expand their distribution of juices and juice drinks into other countries.
In 2007, Campbell's beverage portfolio represented 10 percent of the company's North American sales. The company is recognized for its healthful offerings, including the leading vegetable juice. The company's fruit-and-vegetable juice line includes V8 Splash and V8 V-Fusion. The latter, a 100 percent juice beverage, is high in vitamin A and C, and contains less sodium than many fruits and vegetables.
The beverage business represented about $87 million in sales in 2006 and made up about 1.2 percent of the company's total sales. In 2007, the division was the best-performing of the company's business. The company already had a partnership with Godiva Belgian Blends drinks. The new venture is expected to launch in September. Besides beverages, Campbell also has other businesses that are complementary to the coke brand.
The company has also expanded its juice drink portfolio, adding tomato, pear, and pineapple flavors. This deal strengthens Coke's noncarb portfolio and gives it access to faster-growing noncarb brands that are more aligned with consumer preferences. The beverage division has been under pressure as of late, with lemonade-type flavors falling out of favor. With the addition of these new flavors, the company expects to generate strong sales in fiscal 2007 and beyond.