Coca-Cola is understood to be on the verge of ending its nine year distribution relationship with Cadbury Schweppes in a move which could see the end of CCSB.
Sources close to the company say that the move will follow a decision in the US this week by Coca-Cola Enterprises to stop distributing three of Schweppes’ brands in the US – Sunkist, A&W Root Beer, and Welch’s fruit juices.
The move could have a damaging effect on Cadbury Schweppes soft drinks operations in the UK. CCSB, which has an annual marketing budget in excess of 100m, is a joint venture company, 51 per cent owned by Cadbury Schweppes with Coca-Cola picking up the remainder.
“It is no secret that the relationship between Coca-Cola and Cadbury Schweppes has been sour for a long time,” says one inside source. “Coca-Cola is not happy that it does not directly control its brands in the UK. It makes no sense that some of their brands are in direct competition, like Fanta and Schweppes’ own Sunkist.”
An industry observer says: “Everything would go bell-shaped for Schweppes. It sells a lot of its brands to retailers on the back of Coca-Cola. When that link goes, their brands would have to stand alone, and they are not that strong.”
However, a Coca-Cola spokeswoman denies that moves in the US will be repeated in the UK. “We are closer to CCSB than ever. With the European Championships this summer, a busy promotional period is approaching,” she says. “This is not the time for changes.”