Nestlé-Coca-Cola drinks JV to focus on Europe and Canada

Soft drinks giant Coca-Cola and Swiss food and beverage company Nestlé have agreed to end their ready-to-drink tea partnership Beverage Partners Worldwide (BPW) in several countries, including the US, to focus on Europe and Canada.

The joint venture (JV) has been under review for a while as it was not as successful as the PepsiCo-Unilever Lipton tea brand partnership, particularly in the US where Lipton’s sales volume was 247 million cases in 2010, compared with Nestea’s 78.1 million cases.

The partnership will come to end in all other countries by the end of this year, subject to regulatory approval, which will allow both the companies to independently explore and maximise opportunities in the ready-to-drink tea segment in other markets.

However, the companies will continue to focus on Europe and Canada in order to boost the growth and strengthen the market presence of BPW where this partnership has been most effective.

According to the restructured agreement, Nestlé will grant Coco-Cola a licence to sell the Nestea brand in Taiwan and Hong Kong, but the licence in the US will cease by the end of 2012.

Coca-Cola, which recently acquired the organic teamaker Honest Tea and also owns a brand called Gold Peak, plans to launch a ready-to-drink tea under its Fuze brand, which will be a combination of tea and fruit flavours fortified with B vitamins, and will replace the Nestea products upon the closure of the BPW partnership.

In 1991, the two multinational companies entered into a JV called Coca-Cola and Nestlé Refreshments, following which they again formed a 50:50 partnership (BPW) in 2001 focused on ready-to-drink tea.

BPW operates in more than 60 countries worldwide, with headquarters in Zurich, Switzerland, and offices in the Americas and Asia.

Caption: The Nestlé-Coca-Cola JV has been under review for a while as it did not bring the same success as the PepsiCo-Unilever partnership did for the Lipton tea brand. (Image courtesy of the Coca-Cola Company.)