Coca-Cola, Nestle further refine B.P.W. joint venture
March 27, 2007
by Eric Schroeder
ATLANTA — For the second time in four months, The Coca-Cola Co. and Nestle have agreed to refocus the activities of their Beverage Partners Worldwide (B.P.W.) joint venture.
This past November the two companies agreed to focus B.P.W.’s efforts on ready-to-drink black tea beverages, a move the two companies believed would accelerate the growth and bolster the market presence of the joint venture.
Under terms of the revised agreement, the companies said B.P.W. now will focus 100% on the total tea category and will cease all activities in the United States. The venture already did not operate in Japan. In addition, Nestle has licensed its Nestea and Enviga brands to Coca-Cola in the United States. The two companies also have agreed to develop or acquire additional tea brands to compete more aggressively in the U.S. tea segment.
The final two provisions of the agreement give the two companies the right to compete in coffee in any country after the closing of the agreement, and call for all B.P.W. coffee initiatives to revert to Nestle on a market-by-market basis during a transition period ending no later than Dec. 31, 2008.
"A joint venture focused on the total ready-to-drink tea category, excluding the U.S. and Japan, provides an opportunity to optimize value for all stakeholders," said Leslie Novos, chief executive officer of B.P.W. "The redefined scope affords B.P.W. the opportunity to grow existing and new brands consistent with a leadership agenda outside the U.S. and Japan."
The transaction is expected to close by April 30.
A 50-50 joint venture held by Nestle and Coca-Cola, B.P.W. was created in 2001 following a period of 10 years during which Nestle and Coca-Cola cooperated in a joint venture called Coca-Cola and Nestle Refreshments.