Page last updated at 18:56 GMT, Tuesday, 4 August 2009 19:56 UK

Pepsi shares fizz on bottler deal

A Pepsi worker

PepsiCo has seen its shares sparkle after the firm said it was buying its two top bottlers for $7.8bn (£4.6bn).

The world's second biggest drinks maker said the move was an effort to save money as well as to allow it to get new products to market more quickly.

It clinched the deals for Pepsi Bottling Group and PepsiAmericas months after earlier bids were snubbed.

Shares in PepsiCo added 5% on the news. Analysts said Coca-Cola was looking for similar deals with its bottling firms.

PepsiCo spun off the bottlers in 1999. It already owns 43% of PepsiAmericas and 33% of Pepsi Bottling Group. It will buy the rest in a combination of cash and shares.

Price control

Typically, soft drinks companies such as PepsiCo create and market their drinks and brands, but it is the bottlers who make the products and distribute them.

Owning its bottlers means it can control how products are distributed - and have a greater say in pricing and how they are displayed in shops, said John Sicher, editor of Beverage Digest.

"Ten years ago this business was a simpler business. It was largely about carbonated soft drinks," Mr Sicher said.

"The changes in the beverage business are really what has necessitated this change, in Pepsi's view."

Consumers should expect to see more new Pepsi products, much more quickly, he added, saying PepsiCo would be able to directly manage 80% of its drinks distribution in North America.



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