April 30, 2008 / 3:04 PM / 11 years ago

PepsiCo buys UK vitamin water brand V Water

NEW YORK (Reuters) - PepsiCo Inc PEP.N said on Wednesday it acquired Britain’s V Water, adding a new front to the war over vitamin-enhanced bottled water.

V Water, which comes in six flavors, is made from spring water and additions such as vitamin C, zinc and ginseng. It is very similar to Coca-Cola Co’s (KO.N) vitaminwater, which Coke plans to launch this year in select countries, including the UK, said Morgan Stanley analyst William Pecoriello.

“While we estimate that the acquisition is immaterial to Pepsi’s financials and will likely prove immaterial to Coke’s global growth, the move does raise the risk of hydration wars on a global scale,” Pecoriello wrote in a research note.

He added that this could make it harder for Coca-Cola Enterprises Inc CCE.N, Coke’s largest bottler, to realize the benefits it hoped to gain from vitaminwater’s UK launch.

Last year Coke spent $4.1 billion to acquire vitaminwater maker Glaceau in order to boost its offering of still drinks, which are growing faster than traditional carbonated drinks.

Terms of the V Water deal were not disclosed.

Pepsi, which already owns SoBe Life Water, Gatorade sports drink and Aquafina bottled water, said it also reached an exclusive bottling agreement with Britvic Plc (BVIC.L) to manufacture, sell and distribute V Water in Britain.

Shares of Pepsi were up 1.2 percent at $69.01 on the New York Stock Exchange, in line with the Dow Jones U.S. Beverages Index. Coke shares were up 1.5 percent at $59.60.

Reporting by Martinne Geller; editing by John Wallace

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