Britvic shares surge as it signs 20-year Pepsi deal
Britvic (BVIC.L) shares rose as it said it has signed a new and exclusive 20-year franchise bottling agreement for the production, distribution, marketing and sales of its carbonated soft drink brands with PepsiCo (PEP) in the UK.
This includes well-known brand names, including Pepsi, 7UP and Mountain Dew and was announced in Britvic’s third quarter reporting statement.
The deal extends an existing relationship between the UK company and the American beverage conglomerate until the end of 2040.
Britvic shares were up 5.2% in early trading in London following the news.
"I am delighted that we have formally extended our relationship with PepsiCo in Great Britain for a further 20 years,” said Simon Litherland, chief executive officer of Britvic. “The powerful combination of the Britvic-owned and PepsiCo portfolio offers customers and consumers a broad range of great-tasting, trusted brands for any occasion.”
He added that was excited to add Rockstar, another PepsiCo product, to his business’ expanded offering in the UK.
The FTSE-listed soft drink company said adjusted earnings (EBIT) for the full year 2020 are “anticipated to be slightly ahead of current market consensus” following better than expected trading during the peak summer period. The company said it also benefited from the partial re-opening of the UK hospitality sector since early June and continued strong trading in at-home channels across its markets.
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Britvic’s year-end adjusted net debt balance is expected to be £40m ($50.96m) to £50m ($63.70m) lower than last year, reflecting disciplined cash management, the company said.
The statement added that further lockdown restrictions and the impact of social distancing measures on customer capacity in the hospitality sector are expected to have an impact on the business’ performance in 2021, but Britvic is “confident in its long-term prospects.”
Finally, the company announced that all plastic bottles sold in the UK will be made from 100% recycled plastic (rPET) by the end of 2022. This development comes three years earlier than originally planned and is ahead of the previous target of 50%. This will cover the entire portfolio of Britvic-owned and PepsiCo brands.
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