Refresco’s purchase of Cott’s soft drinks manufacturing business for $1,250 million is significant because:
1 Cott, a world top 10 player, is exiting traditional soft drinks manufacture as well as fruit juice, both of which are facing volume declines in developed markets.
2 Refresco will become a new global contract manufacturing leader, with strength in both Europe and the Americas.
3 Refresco will also be a new UK soft drinks leader to challenge the scale of Coca-Cola and Britvic/Pepsi.
4 Cott moves to become a primarily services business in water, coffee/tea and home/office refreshment. In filtration services, it has US leadership through DS Services and European leadership through Eden Springs.
5 Cott retains some substantial soft drinks service interests in concentrate production and Royal Crown franchising.
This is a more than $1 billion deal between two quoted companies, creating the world’s first really global contract manufacturing soft drinks producer in the new Refresco and enabling Cott to focus more on building its portfolio of service businesses.
Refresco’s strength will lie in producing the full range of soft drinks, while Cott devotes its strategy to water, coffee/tea and other refreshment services.