Carlsberg buying Britvic? Seems radical, but it might just start a trend

It would be quite a radical departure for an alcoholic drinks supplier. At least in the UK. We’ve seen brewers throw themselves into the low & no market. And on the soft drinks side, we’ve seen hard seltzers, and branded tie-ups with booze brands on RTDs, while Monster’s Nasty Beast is the rather unexceptional exception that proves the rule that alcohol and soft drinks don’t mix. Or rather, they do, but not operating under the same roof.

Nonetheless, there’s a certain logic to the two sectors joining forces in terms of shared supply chains and customer bases. It might even start a trend, with the share price of Fever-Tree, for example, looking vulnerable.

But in the case of Britvic, is the rationale sufficiently compelling to warrant the heavy debt burden Carlsberg would need to take on? With its share price falling on the news, shareholders also seem unlikely to back a rights issue that might enable a higher bid.

That’s the first big question. The other surrounds Carlsberg’s stewardship of Britvic. Would a drinks manufacturer, and in particular a brewer, be able to offer the necessary category focus that a soft drinks business needs to grow and flourish? Operationally, one does not envisage an issue in managing bottling contracts as it does already in Denmark, Norway and other markets. And PepsiCo has given them the green light.

But Britvic, crowned the Supplier of the Year at the Grocer Gold Awards in 2023 (and shortlisted again at the awards next week) has shown no little skill in acquiring challenger brands such as Plenish and Jimmy’s Iced Coffee – in categories adjacent to its core portfolio of fizzy pop, squash and juices – and growing them. There’s no reason for that not to continue.

Strangely enough, Kirstie Maydew, Carlsberg’s new head of M&A, starting 1 September, has spent the past five years leading M&A at Britvic rival CCEP. Does she know something we don’t?