Coke and Danone Strike Water Deal

26 April 2005

The somewhat stagnant water venture between US soft drinks titan Coca-Cola and French food group Danone is to be dissolved.

Coca-Cola has agreed to buy out Danone's minority stake in five spring water bottling plants in the US and to boost advertising and promotions spend by around 20% on Danone's premium Evian brand, which it imports and markets.

The finances of the deal have not been disclosed but Coca Cola is expected to pay Danone less than $100 million (€76m, £52m) for the shareholding.

The two companies agreed in 2002 to produce and distribute Danone's spring waters in North America under brand names such as Dannon and Sparkletts.

But the partnership failed to ignite sales in the face of fierce competition from Nestlé's Poland Spring and Arrowhead brands, also PepsiCo's Aquafina.

Coca-Cola's justification for the buyout is that it will enable it to move faster on repackaging, promotions and distribution, according to Don Knauss, president of North American operations.

Data sourced from Wall Street Journal Online; additional content by WARC staff