Pepsi Names Suntory Japan Master Franchisee

From Beverage Digest 10/3/97

Pepsi Names Suntory -- Owner US Bottler Pepcom -- Japan Master Franchisee. 30-Year 'Strategic Alliance.'

Suntory Ltd -- owner US top-10 Pepsi bottler Pepcom based in Raleigh NC -- named Japanese master franchisee starting early 1998; deal term 30 years. New company takes on all marketing, production and distribution of Pepsi soft drinks in Japan; will manage relationships with Pepsi's existing 9 franchise bottlers (FOBOs). Pepsi transfers existing COBO operations to Suntory. Pepsi's Japanese volume currently handled 50% by COBO, 50% by FOBOs. Pepsi executive says new company will be Japan's "number 2 beverage company." Coke is #1. Brands. Pepsi Japan will supply concentrate for new unit's sale of: Pepsi, Diet Pepsi, 7UP, Mt Dew. Also included in relationship: Suntory's CC Lemon CSD, Boss coffee drink, Oolong teas. Vending. Pepsi executive says vending channel in Japan represents 40% total industry volume. New alliance will have "over 360,000" vending machines, "more than 3 times Pepsi's current vending ability." Coke system operates about 870,000 vending machines in market (BD 9/5/97).

Executives. Pepsi. Pepsi CEO Craig Weatherup in Japan for 10/3/97 announcement of Suntory deal. Observes: "New relationship with Suntory fits perfectly with our strategy to align with strong local franchisees." Adds: "Suntory's proven ability to build powerhouse brands in Japan through dynamic marketing and ubiquitous distribution is the envy of the industry." Suntory. Suntory Ltd president Shinichiro Torii: "Our competitiveness in the soft drink business will be strengthened further by adding Pepsi brands and rounding out our portfolio with strong global brands with high growth potential." Adds: "Based on this, I'm confident the relationship between PepsiCo and us will be further strengthened in the US and Japan."

Plus. In 10/96 session with analysts, PepsiCo chairman/CEO Roger Enrico and Pepsi CEO Craig Weatherup outline future global importance of franchise bottlers. Market. Deal means Suntory/Pepsi alliance become #2 beverage company in Japan. Currently Coke holds 52 share, Pepsi 8, Cadbury 1.9 (BD 9/19/97). Coke has 17 bottlers in Japan. Salomon Brothers' Jennifer Solomon says Coke "earns 15% or more of total profits" from Japan.

Return to 10/3/97 Headlines.

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