Water under the bridge for Danone
November 2, 2004
Paris - French food group Danone will renegotiate joint water ventures with Coca-Cola in the United States and Suntory in Japan by June 2005, as bottled water sales continue to slide, Danone chief financial officer Emmanuel Faber was quoted as saying on Tuesday.
US sales of Danone's Evian brand bottled water this year will be "less than one hundred million dollars," down from $220 million four years ago, the newspaper Les Echos cited Faber as telling a meeting of analysts Friday.
Faber said the company's US joint venture with Suntory for commercial water distribution was also under review with the same deadline.
Under a deal signed in 2002, Coca-Cola, the senior partner in the venture with a 51 percent stake, must pay Danone compensation if certain growth objectives are not met. But Faber said this will not be necesary.
"Coca-Cola is not in the business of paying penalties or Danone in that of receiving them," he told the paper.
"We have therefore asked to renegotiate in order to create a more durable arrangement.
"We are giving ourselves until June 2005 to renegotiate the terms of our agreements with Coca-Cola."
Faber said that with Suntory, a pause in growth in sales in the region means "all options are open" on the deal, although he ruled out an increase in Danone's 47 percent stake.
"We will not become the full owners of this business until the water market stabilizes," he said. - AFP
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