Royal Unibrew Shares Fall as PepsiCo Switches to Carlsberg
Royal Unibrew shares fell 26% as PepsiCo moved Nordic bottling rights to Carlsberg. The shift impacts 13% of Unibrew revenue across Denmark and the Baltics.
Shares in ROYAL UNIBREW plummeted by more than 26% on Tuesday, marking the stock's steepest single-day decline on record and pushing its valuation to its lowest level since late 2022. The sell-off followed an announcement that PepsiCo has decided to reshuffle its Nordic bottling operations, dealing a major blow to the mid-sized Danish brewer.
The shift comes after the company failed to reach an agreement to extend licenses for Denmark, including trade along the border of Germany, as well as Finland and the Baltic states. This specific segment of the business currently accounts for approximately 13% of the group's total revenue. In a formal statement addressing the failed negotiations, the company clarified the outcome.
It has not been possible to reach an agreement.
While the partnership in northern Europe is set to conclude in 2028, the company will continue to serve as a partner for the American beverage giant in the Benelux countries. Meanwhile, CARLSBERG-A has emerged as the primary beneficiary of the reshuffle, announcing a long-term agreement to take over the production, sales, and distribution of the brand's drinks in the affected Nordic and Baltic regions starting in early 2029.
To accommodate the new partnership, the larger brewer noted that its existing bottling agreements with the COCA-COLA CO/THE in the Danish and Finnish markets will remain in place until they expire at the end of 2028. This transition solidifies the group's position as a preferred partner in the European market.
Financial analysts at Citi in the United States warned that the loss of the contract could trigger significant earnings downgrades for the smaller rival. Simon Hales, an analyst at the bank, highlighted the impact on the firm's regional portfolio.
We believe Royal Unibrew would have liked to have continued to work with Pepsi and the loss of this contract will leave a big hole in the groups Scandi portfolio.
Following the news, shares in the larger brewing group saw a modest decline of 1.4%, while the market processed the long-term strategic implications of the expanded partnership.
