Coca-Cola and Femsa expand into non-carbonated beverages

Mexican brewer and bottler Coca-Cola Femsa said it plans to buy Latin American juice maker Jugos del Valle for USD 380 million in a joint venture with the Coca-Cola Company.

The Coca-Cola Company, which also owns a stake in Femsa, said that the transaction will not only increase greatly the Coca-Cola system’s presence in the fast-growing non-carbonated beverage segment in Latin America, but also offers the potential for significant synergies. Jugos del Valle, according to a corporate statement, is the second largest producer of packaged juices, nectars and fruit flavoured beverages in Mexico, the largest producer in Brazil, and has a presence in other Latin American markets. Jugos del Valle generated approximately USD 440 million in total revenues for the 12-month period ended 30 September 2006.

Coca-Cola Femsa, the second-largest Coke bottler in the world, said they and the Coca-Cola Company would also take on USD 90 million of Jugos del Valle’s debt, bringing the deal’s total value to USD 470 million.

Jugos del Valle must have been on the market for a while because an earlier suitor, Kraft Foods, ended all discussions regarding a potential acquisition of Jugos del Valle in 2002 as the two companies were unable to reach mutually satisfactory terms.