Coke, Nestle part ways on tea in U.S., elsewhere

JAN 6 - Coca-Cola Co KO.N and Nestle SA NESN.VX said on Friday that Coke's license for the Nestea ready-to-drink tea brand would expire at the end of this year and that the companies' tea joint venture would now focus on Europe and Canada.

A truck containing cases of Coca-Cola, which will be delivered to stores, sits outside a warehouse at the Swire Coca-Cola facility in Draper, Utah March 9, 2011. REUTERS/George Frey

The 50-50 partnership focused on the ready-to-drink tea category, Beverage Partners Worldwide, was formed in 2001 following a decade-long joint venture called Coca-Cola and Nestle Refreshments.

In Taiwan and Hong Kong, Coke will enter into a license agreement with Nestle for the Nestea brand. In other territories, the joint venture will be phased out by the end of 2012, subject to any regulatory approval, Coke and Nestle said in a joint statement.

News of such changes in the partnership was reported earlier on Friday by Beverage Digest, an industry publication.

According to Beverage Digest, U.S. Nestea volume totaled about 78.1 million cases in 2010, down from 92.6 million cases in 2005 and 113.5 million cases in 2000.

By comparison, Lipton tea, which is handled by PepsiCo Inc PEP.N, had 2010 U.S. volume of roughly 247 million cases.

Beverage Partners Worldwide has transformed over the years as Coke and Nestle each started to handle other tea brands besides Nestea, Beverage Digest noted.

In the United States, Coke’s products include bottled Gold Peak iced tea, sold in the refrigerated cases of grocery stores, and the Honest Tea line of bottled teas.

According to Beverage Digest, Coke is expected to introduce a new line of cold-fill teas under its “Fuze” brand to replace Nestea, plus launch a new line of Fuze juice drink products.

Nestle, meanwhile, owns the Sweet Leaf Tea Co.

Nestle shares fell 0.8 percent, while shares of Coca-Cola were down 0.8 percent at $68.81.