Dive Brief:
- Pioneer Food, the maker of Ceres fruit drinks and dozens of other food and beverage brands, says it will exit the deal that gives it bottling rights for PepsiCo in South Africa.
- The move leaves the future of Pepsi unclear. Pioneer issued a statement saying the "Pepsi brand portfolio will however remain in South Africa," but offered no further details.
- The announcement comes as Pioneer Food announced a 35% rise in profit in the most recent fiscal year, based largely on a write-down from the exit of its poultry unit.
Dive Insight:
PepsiCo has been down this road before in South Africa. After the beverage brand returned to that nation with the collapse of apartheid, PepsiCo signed a bottling deal with a company called New Age Beverages. That deal ended after just three years, when PepsiCo apparently decided New Age couldn't compete against Coca-Cola's distribution system.
The deal with Pioneer, signed back in 2006, was supposed to be Pepsi's salvation in that nation. Now Pioneer has decided that Pepsi bottling isn't a business it wants to be in, and will take a write-down worth 34 million rand ($3 million) to get out.