The markets were not impressed with the $4 billion juices ‘n’ snacks joint venture announced yesterday by Coca-Cola and Procter & Gamble [WAMN: 21-Feb-01].
P&G is perceived as skimming the cream of the deal and in afternoon trading Coke shares fell by over six percent, $3.55 to $54.92, while P&G shares rose $1.29 to $77.
Commented beverage analyst Bill Pecoriello of Sanford Bernstein: “We question Coke's strategy of contributing half the profit stream of its growing juice business to share in the profits of two declining [P&G] brands: Pringles and Sunny Delight.”
Both companies spent yesterday morning huckstering their new partnership to Wall Street, explaining to sceptical analysts how Coke's sixteen million outlet global distribution system will enable them to achieve major revenue increases for P&G snack and juice brands.
In return, Coca-Cola will be able to trawl P&G's extensive NPD resources and exploit its technology to develop new and more innovative brands, especially in the fields of nutrition and health.
Hyped Coke’s Donald Short, the venture’s newly appointed chief executive: "On top of an ideal stable of brands, we're going to have the power to innovate. We're going to do exciting things in the US, Japan and western Europe.”
News source: Financial Times