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Cadbury on a high after Coke deal.

Shares in one of the region's biggest employers, soft drinks to chocolate-maker Cadbury Schweppes, rocketed yesterday after it clinched a major distribution deal with American bottler Coca-Cola Enterprises, 44 per cent owned by Coca-Cola.

The stock jumped 50p to 682p as fears subsided that CCE would drop Cadbury from its bottling operations, forcing it to invest heavily in its own bottling business.

Analysts have been worried for some time that increasing competition between the British group and Coca-Cola in the US would persuade CCE not to renew its agreement to distribute Cadbury's US brands, Dr Pepper/Seven Up.

There have been rumours that Coca-Cola might develop its own Dr Pepper alternative and then bring pressure to bear on CCE to drop Cadbury.

"There was always a worry in London that Dr Pepper would be kicked out of CCE. There have been all sorts of rumours that Pepper's future inside Coke was insecure," said Henderson Crosthwaite analyst Mr David Lang.

"It's very good news for Cadbury's. It shows that Cadbury is even more strongly entrenched inside the Coke system even though Mr Douglas Ivester has recently taken charge."

Mr Ivester was named in October as successor to former Coke chairman and chief executive Mr Roberto Goizueta.

Under the deal CCE, the largest distributor of soft drinks in the United States, will continue to manufacture and distribute Dr Pepper product brands for at least an additional five years to December 31, 2005.

It will also make and sell other Dr Pepper/Seven Up (DPSU) brands, including Schweppes, Canada Dry and Squirt, for an extra three years to December 31, 2001. The three brands represent about 15 per cent of the United States fizzy drinks market.

"This is a win for both partners," said Mr John Brock, managing director, beverages stream, for Cadbury Schweppes.
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Author:Wachman, Richard
Publication:The Birmingham Post (England)
Date:Jan 15, 1998
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