Tesco has signed a major deal with Refresco Gerber to produce much of its own-label range of carbonated and still soft drinks.

The retailer said the deal, which is believed to be for at least three years, would allow Refresco Gerber which already produces juices and juice drinks for Tesco, to make a major investment in equipment at its UK hub in Bridgwater, Somerset, to improve its own-label offering. Princes Soft Drinks will also be tasked with part of Tesco’s own label portfolio.

The consolidation will see Tesco part ways with Cott Beverages, which previously held the main Tesco soft drinks contract and is part of a wider initiative by CEO Dave Lewis to reduce the range and seek long-term strategic relationships with suppliers to deliver lower prices.

Under category buying manager for soft drinks David Beardmore, Tesco also plans a major drive to improve the health credentials of its soft drinks.

Refresco Gerber has been tasked with reducing preservatives, sugar and artificial sweeteners.

Own label accounts for 70% of Tesco’s sparkling flavoured waters and 42% of sparkling waters. Refresco Gerber will also take on mixers, with 60% of Tesco’s offer own label, as well as energy drinks where the retailer has a basic own-label range and the KX brand.

The deal will also be a shot across the bows to branded suppliers with Beardmore having called for greater innovation to reduce sugar and artificial sweeteners.

Lewis this week told a Tesco supplier event, held at Wembley and organised by IGD, that he was determined to sign up suppliers to longer-term strategic partnerships, as it fights back from record losses it announced last week.

“We are pleased to be growing our relationship with Europe’s largest bottler of soft drinks and this long term deal gives Refresco Gerber UK the security to innovate and invest in new and exciting products for our customers,” said Beardmore.

Refresco Gerber UK commercial director James Logan said: “This new agreement provides us with an exciting opportunity to diversify our production capabilities into different sectors of the soft drinks category. Using Refresco Gerber’s experience, gained in markets across Europe, we will invest in new, healthy and clean production capabilities to deliver better products for Tesco’s customers.”

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