Coke, P&G To Offer Juice, Snacks

Wednesday, February 21st 2001, 12:00 am
By: News On 6

ATLANTA (AP) — Care for a Minute Maid fruit juice to wash down your Pringles potato chips? Procter & Gamble Co. and Coca-Cola Co. sure hope so.

The two consumer products giants announced Wednesday the formation of a new jointly owned company designed to marry the breadth of Coke's global distribution network and P&G's research and development skills.

The new company, with about 40 brands, 6,000 employees and 15 manufacturing plants, would have annual sales of around $4.2 billion, Coke and P&G executives said.

Coke will contribute to the new company its Minute Maid juice division, which includes Hi-C and Five-Alive beverages, plus its Fruitopia drink. P&G will contribute Pringles chips and Sunny Delight juice drinks.

The new company, yet to be named, will have its own management and two directors from each parent company. Veteran Coke executive Donald Short will be the chief executive officer.

``The creation of this new company really is an exciting prospect because it's about building a whole new business,'' Coke chairman and chief executive Douglas Daft said in a conference call with analysts.

P&G has struggled to expand the availability of its primary snack brand, Pringles, while sales of Sunny Delight have slumped in recent years against Pepsi's Tropicana juices and Minute Maid.

The venture also will allow the companies to distribute their products more quickly and expand Coke's juice lineup.

P&G evaluated other options for its juice and snack business, including selling Sunny Delight and Pringles, but decided the joint venture was the best option, said A.G. Lafley, P&G president and CEO.

``We believe retaining a financial equity position in this business is the better alternative,'' he said. ``Strong innovation will be a foundation of future growth for the new company and for the creation of more successful brands.''

The new company expects to expand Pringles from 150,000 sales points — now mostly supermarket snack aisles — to 1.5 million in such places as checkout lines, gas stations and vending machines.

Over the last decade, Pringles' sales have surpassed $1 billion, but were restricted because they are available in only one or two places per grocery store. Coke products are available in five to 10 places per store, including near the checkout lines, Lafley said. The chips also will come in new package sizes.

The venture is subject to U.S. and European regulatory approvals.

Shares of the Atlanta based Coke were down $3.39 to $55.08 in morning trading on the New York Stock Exchange, where shares of the Cincinnati-based P&G were up 84 cents to $76.55.


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