Agreement between BBH and PepsiCo for the Baltic States
Baltic Beverages Holding (BBH), which is owned equally by Orklas beverage company Pripps Ringnes and the Finnish company Hartwall, has made a preliminary agreement with the international soft drinks company PepsiCo International to manufacture and sell soft drinks in Estonia, Latvia and Lithuania. The aim is to reach an agreement which will run for twenty years from the beginning of next year with an option to prolong for another five years.
Hartwall and Pripps Ringnes, the parent companies, have bottling agreements with PepsiCo which apply to Norway and Finland. In addition, Pripps Ringnes and PepsiCo have an agreement on cooperation in the Swedish market which will run from 1 January 2001.
BBHs current product range in the Baltic countries comprises beers and mineral waters. The planned partnership will enable BBH to further consolidate its market leadership and its position as a beverage supplier in the Baltic States.
Production, sale and distribution of the PepsiCo products will be handled within BBHs existing framework of breweries in the Baltic States: Saku in Estonia, Aldaris in Latvia and Kalnapilis and Utenos Alus in Lithuania.
PepsiCos most important soft drink brands are Pepsi-Cola, Pepsi Max and 7Up.
The per capita consumption of soft drinks is quite low in the Baltic States. The estimated average per capita consumption is 25 litres, compared to approx. 70 litres in Sweden and more than 110 litres per capita in Norway.
BBH currently has interests in a total of twelve breweries in Eastern Europe, four of which are located in the Baltic countries, six in Russia and two in Ukraine. In 1998, BBH had net sales of NOK 3.4 billion, while the annual total production for the group amounted to 913 million litres. Total production for 1999 is estimated to amount to 1,200 million litres.