Dr Pepper and Coca-Cola sign licensing agreement
June 7, 2010
PLANO, TEXAS — Dr Pepper Snapple Group, Inc. has agreed to license certain brands to The Coca-Cola Co. on the completion of Coca-Cola’s acquisition of Coca-Cola Enterprises’ North American Bottling Business.
Coca-Cola will offer Dr Pepper and Diet Dr Pepper in local fountain accounts currently serviced by C.C.E. and will include Dr Pepper and Diet Dr Pepper on its Freestyle fountain dispenser. Under the agreement Coca-Cola also will distribute Dr Pepper in the United States and Canada Dry in the Northeast U.S. The company also will distribute Canada Dry, C’Plus and Schweppes in Canada.
“These agreements build a strong foundation for continued growth of Dr Pepper and our leading flavor brands,” said Larry Young, president and chief executive officer of Dr Pepper Snapple Group. “It solidifies Coke’s support of the Dr Pepper trademark while enabling us to optimize our route-to-market by assuming distribution of several key brands. Additionally, we’re increasing our fountain presence, enabling millions of consumers to sample our brands each day — a great win for Dr Pepper.”
The Coca-Cola Co. will make a one-time cash payment of $715 million to distribute the Dr Pepper and D.P.S. brands where they are currently distributed by C.C.E. The agreement has an initial term of 20 years with 20-year renewal periods.
“We are pleased to have reached a fair and mutually beneficial agreement with Dr Pepper Snapple Group to continue distributing their brands, marking yet another key milestone in our acquisition of the North American operations of Coca-Cola Enterprises,” said Muhtar Kent, chairman and chief executive officer of Coca-Cola. “Importantly, this agreement aligns with our 2020 vision of more than doubling our system revenue while increasing our system margins by leveraging the world’s most powerful distribution networks.”