Bulmer loses Perrier and Buxton to CCSB: OFT unconcerned that deal will reinforce dominant position in soft drinks market

Click to follow
COCA-COLA and Schweppes Beverages, the fizzy drinks distribution company, has taken the British contract to supply Perrier and Buxton mineral waters from HP Bulmer, the cider maker.

Bulmer, which also distributes Red Stripe Lager and Orangina orangeade, has held the Perrier agreement for 13 years. A spokeswoman for Perrier said the break with Bulmer was amicable, but added: 'We want to take advantage of CCSB's superior network, particularly into vending machines.'

John Rudgard, Bulmer chief executive, said the switch would not have a significant impact on his company's profits.

In August 1991 the Monopolies and Mergers Commission, after a study lasting 13 months, said that CCSB held monopoly control of the carbonated drinks market. Yesterday's deal reinforces the joint venture as the dominant player in soft drinks.

Consumer groups are already worried about the prices of soft drinks, particularly those sold in public houses. Pam Hanley, of the Consumers Association, said: 'In a recent survey we found that you could be asked to pay the equivalent of pounds 3 for a pint of orange juice. And if the distribution channels for soft drinks are concentrated in fewer hands, the situation may get out of hand from the consumer's point of view.'

Perrier and Buxton between them sell about 60 million litres a year in Britain - 14 per cent of the total bottled water consumption of 435 million litres. Perrier sold 23 million litres in Britain last year. In 1989, before the product was undermined by a contamination scare, it sold 30 million litres.

According to a report published by Britvic, which is CCSB's main rival, mineral water made up 5 per cent of UK soft drink consumption last year - an area that is one of the few sectors of the pounds 33.5bn British beverage market that is growing. Sales of beer and coffee are static and tea drinking is in decline, but sales of soft drinks have doubled since 1980.

CCSB is 51 per cent-owned by the sweets and drinks group Cadbury Schweppes and 49 per cent owned by Coca-Cola of America. The 1991 MMC report concluded that CCSB had 43 per cent of the carbonated drinks market in value terms, and 36 per cent by volume. Britvic, the same report stated, had 22 per cent in value terms and 20 per cent in volume.

Bulmer shares lost 4p to close at 404p. Cadbury Schweppes shares rose 2p to 463p.

Comments