Refresco drinks merger could mean higher prices for shoppers, warns CMA

Alys Key
Follow Alys
Shoppers might face higher prices after the merger, the CMA has warned (Source: Getty)

Two soft drinks companies which produce houshold brands including Old Jamaica and Innocent Smoothies could be prevented from merging after the UK's competition watchdog sounded alarm bells.

Rotterdam-based Refresco's proposed $1.25bn (£935m) purchase of Cott of Canada's worldwide manufacturing business has been referred for an in-depth investigation by the Competition and Markets Authority (CMA) due to fears it could increase prices for shoppers.

"These companies supply well-known UK shops and brands with soft drinks, who in turn sell these to thousands of people daily," said CMA acting director Rachel Merelie. "It is therefore important that we address any issues to ensure that shoppers do not lose out."

Read more: No sugar rush here: Soft drinks industry driven by low and no sugar drinks

Both companies produce, package and distribute drinks using a process which allows them to be sold without preservatives or refrigeration. With only one other similar supplier in the UK, the watchdog fears that consumer choice could be restricted.

Merelie added: "We have looked at all aspects of this merger and have concerns that the merger could lead to reduced competition in the manufacturing and packaging of certain juice drinks. This may result in higher prices or quality standards slipping for stores and brands, with potential knock-on effects to end-consumers."

Refresco chief executive Hans Roelofs responded by saying the company would be willing to find "remedies" to obtain clearance in the UK, having already gained approval in the US and Canada.

Read more: No sugar Irn Bru helps A.G. Barr revenues to bubble up

The two companies produce in-house brands for retailers as well as owning some brands and making and bottling other brands under contract.

Cott's currently owns MacB flavoured water, Old Jamaica soft drinks and Calypso juice drinks among others.

Meanwhile Refresco's clients include Innocent, Ocean Spray and Del Monte, as well as a raft of retailers and wholesalers such as Tesco, Asda, and Morrisons.

Read more: Tesco's £3.7bn takeover of Booker Group cleared by competition watchdog

Related articles