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Coca-Cola to Pay $715M to Distribute Dr. Pepper Brands

ATLANTA -- Coca-Cola Co. will pay Dr Pepper Snapple Group Inc. $715 million for the rights to distribute some of the industry's most popular brands, according to a report by the Wall Street Journal.

As part of the deal, Dr Pepper and Diet Dr Pepper will be the only non-Coke brands distributed through Coke's new Freestyle vending machine, a touchscreen fountain that offers more than 100 flavors. Dr Pepper Snapple values that access at an additional $115 million to $135 million, according to the newspaper report.

Coca-Cola also agreed to include some Dr Pepper brands in sales to local fountain customers, including small restaurant chains. Dr Pepper Snapple's biggest brands have sold well in bottles and cans but have lagged at soda fountains, controlled by Pepsi and Coke. "Fountain is one of the greatest ways to increase sampling of our brands," Greg Artkop told the newspaper.

Dr Pepper Snapple relies on independent and in-house distribution for part of its sales volume, with the rest handled by Coke and Pepsi bottlers.

These two large beverage companies' move to buy their largest independent bottlers prompted a change in the Dr Pepper Snapple distribution agreement. PepsiCo paid Dr Pepper Snapple $900 million late last year for a 20-year licensing deal, the same amount length of the new Coke agreement.

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