ONE of the world’s biggest bottlers, producers, and distributors of drinks owned by The Coca-Cola Company has strengthened its spirits portfolio with a deal to buy Finlandia, a premium vodka brand.
Coca-Cola HBC AG, which is 23%-owned by The Coca-Cola Company and is listed on the London stock market, has acquired Finlandia from a subsidiary of Jack Daniel's owner Brown-Forman in a deal worth $220 million.
The acquisition builds on the long-standing distribution deal Coca-Cola HB has with Finlandia, with the soft drinks giant having distributed the leading spirit brand in several markets for 17 years.
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And it will see Finlandia, which was established in 1970 and sells 2.7 million nine-litre cases around the world each year, further diversify a wide portfolio that Coca-Cola HBC distributes on behalf of major companies such as Gruppo Campari, Scotch whisky giant Edrington, and Brown-Forman. That portfolio ranges from Aperol and Campari to Brugal, Jack Daniel's, The Famous Grouse and The Macallan.
The company, which is listed on the FTSE 100, also owns several spirits brands, including Rezangyal, a traditional fruit brand, following its acquisition of Rezangyal of Hungary in 2017, and Zlatni Pelin (bitter liqueur) and Zlatna rakia (brand). The latter two came with its acquisition of MB Impex of Serbia in 2017.
Soft drinks bottled and distributed by the company include Coca-Cola, Coca-Cola Zero, Fanta, Sprite, and Powerade.
Finlandia, renowned as a base spirit for cocktails and available in pure and flavoured versions, was hailed by Coca-Cola HBC as the leading vodka brand in central and Eastern Europe.
It said the acquisition of the brand would “further enrich and strengthen its portfolio across most markets”.
And it declared that ownership of Finlandia would “enhance” its “premium spirits credentials; driving mixability opportunities with premium and super-premium non-alcoholic ready-to-drink products, helping capture more drinking occasions, and strengthening partnerships with customers in strategically important channels such as HoReCa (hotel, restaurant, catering)”.
More than 60% of the volumes of Finlandia sold is generated within Coca-Cola HBC’s geographical footprint. The spirit is produced by Anora Group in Finland on a long-term production services agreement.
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Zoran Bogdanovic, chief executive of Coca-Cola HBC, said: "Having been associated with the distribution of Finlandia for 17 years in several markets, we are excited by this unique and regionally relevant opportunity that will support the acceleration of our on-premises business across more of our markets.
“The proven complementarity of our premium spirits business with our strong NARTD (non-alcoholic ready-to-drink) portfolio enables us to offer solutions for a broad range of 24/7 consumption occasions, particularly socialising moments.
“We view this as an attractive investment and a natural evolution of our role as one of Finlandia's distribution partners, further attesting to the strength of our time-tested and wide-ranging partnership with Brown-Forman. We appreciate the trust placed in us and look forward to creating more value for our partners and customers by capturing new opportunities with our well-rounded beverage portfolio."
Lawson Whiting, chief executive of Brown-Forman, said: "We are pleased to pass on the ownership torch of Finlandia to Coca-Cola HBC, who has proven to be a strong and reliable partner to our brands for more than 17 years.
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“We believe Coca-Cola HBC is well-suited to support Finlandia's future stages of development. I am confident that Coca-Cola HBC's growth ambitions and capabilities in premium spirits, its critical mass and executional excellence, coupled with its leading sales and distribution credentials in the markets where it operates, will accelerate Finlandia's growth trajectory."
While Coca-Cola HBC, formerly called Coca-Cola Hellenic Bottling Company, and Brown-Forman toasted the deal, Russ Mould, investment director at AJ Bell, suggested investors were less than convinced.
Mr Mould said: “The market reacted negatively to Coca-Cola HBC’s $220 million acquisition of Finlandia vodka, unsure about a deal which feels a bit of a departure from its core activity of bottling Coke.”
Coca-Cola HBC has acquired the owner of Finlandia from Brown-Forman Finland Oy from Brown-Forman’s wholly owned subsidiary Brown-Forman Netherlands BV. The acquisition is being made through Coca-Cola HBC’s wholly owned subsidiary CC Beverages Holdings II BV and is expected to complete in the second half of the year, subject to regulatory approvals.
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