Royal Unibrew shares tank as PepsiCo licensing deal to end

(Sharecast News) - Shares in Royal Unibrew tanked by more than a fifth on Tuesday after the Danish brewer said it was ending a regional licensing deal with PepsiCo. The license agreements, which Denmark, including German border trade, Finland, and the Baltic states, will expire at the end-2028. Shares were down more than 23% in European trade.

Royal Unibrew said it was unable to reach a new agreement, but "would have welcomed the opportunity to continue the partnership".

"While ending the partnership was not our preferred outcome, the contract expiry in 2028 will remove a number of structural constraints," said chief executive Lars Jensen said in a statement. "This gives us flexibility to further accelerate the growth of our own brands and to explore new partnership opportunities."

"Our own brands - with Faxe Kondi, Jaffa, and Novelle as strong examples - have consistently outperformed the soft drinks market in recent years and are expected to build further momentum."

Royal Unibrew said it would continue to operate the partnership business for the remainder of the contractual period in accordance with the agreement.

The PepsiCo beverage business in the region Baltic states currently accounts for approximately 13% of Royal Unibrew's net revenue, the company said.

"As current market trends are expected to continue and the Western European and International segments are expected to grow, this share is expected to decline toward the end of 2028."

The loss of net revenue related to the partnership is expected to be partly compensated for by accelerated growth in our its own brands, it added.

"This reflects trends already evident today such as shifts in consumer demand toward local brands, including flavoured carbonated soft drinks, local colas, and other non-alcoholic beverage categories. This is expected to be further supported by the removal of portfolio conflicts associated with the partnership."

Reporting by Frank Prenesti for Sharecast.com