Coca-Cola may be looking to add Cadbury-Schweppes’s Snapple business to its non-carbonated beverage line. Matthew Reilly, beverage analyst at Morningstar, joined “Closing Bell” to discuss the advantages to Coca-Cola -- and the drawbacks for Cadbury -- if the sale were to take place.
“Coke’s always had a disadvantaged position in iced tea,” said Reilly. “It’s been a very dynamically growing category in the U.S. and they really missed out on a lot of market share growth.”
The overall beverage business in the U.S. is growing at about 2.5% while carbonated soft drinks are declining. Reilly said that in order for Coca-Cola to prevent losing market share, it should have a strong iced-tea brand.
“If you have strong management teams, and if you can give them a big brand like Snapple, they might be able to squeeze a little more growth out of the brand than Cadbury has lately.”
Cadbury is disadvantaged in general because Snapple is its main source of business, he said. “Cadbury doesn’t have an energy drink brand, nor do they have a very good water brand,” said Reilly. “Even if they have been outperforming the market, it’s not a growth market overall.”