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News > Deals
A Coke and a smile?
December 4, 2000: 6:13 p.m. ET

No.1 beverage company to introduce new drinks after missing out on Quaker
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NEW YORK (CNNfn) - Now that has PepsiCo. has clinched a deal for Quaker Oats, rival Coca-Cola Co.'s strategy may include introducing new products and making small acquisitions to shore up its noncarbonated soft drinks business, analysts said Monday.

Atlanta-based Coca-Cola Co. (KO: Research, Estimates) will likely return to its original strategy of beefing up its "fizz-less" soft drinks products, which include the Nestea line of drinks and fruit drink Fruitopia, as well as introduce new products.

"Coke will just continue doing what they are doing but they are just not as happy," said analyst Manny Goldman, of ING Barings.

However, analysts agreed that Coke's lost out in the competitive sports drink business.

PepsiCo. agreed to buy Quaker Oats for $13.4 billion Monday, ending a month-long battle for the parent company of Gatorade. PepsiCo. (PEP: Research, Estimates) will gain the much-valued Gatorade and vault automatically to first place among the sports drinks brands, with Coke remaining a distant second with Powerade.


PepsiCo. clinches deal for Quaker Oats


graphicCoke will maintain its top beverage position in the U.S. and globally, analysts said.

"Losing Quaker is by no means a death blow," said analyst Ann Gurkin of Davenport & Co. "They will return to the Coke brand, developing teas and juices.

In late November, Coke aborted its own $15.75 billion bid for Quaker Oats (OAT: Research, Estimates) after Coke's board balked.

The beverage company is expected to focus internally next year. Coke plans to introduce several new carbonated soft drink products and is looking to buy a coffee drink, Planet Java, said John Sicher, editor of Beverage Digest. Coke also plans to introduce its new energy drink, KMX.

"With innovation and new product plans, it will be pretty intense next year," Sicher said.

The Quaker deal seals up the sports drink race for now, analysts said, and the contest is now on for the rest of the "fizz-less" business.

"This puts Pepsi in a class by themselves and that's why Coke is not happy," said ING's Goldman.

With Quaker gone, and Gatorade with it, likely targets are minimal. Coke may make some smaller purchases, such as Nantucket Allserve Inc.'s Nantucket Nectars and Arizona Beverages, of Beverage Marketing USA Inc., to flesh out its noncarbonated drinks portfolio, analysts said.

"Coke will be planning to do what it had planned to do before all the Quaker action started," Goldman said.

Quaker gained $2.44, or 2.75 percent, to $91.06 Monday, PepsiCo. rose $1.44 to $43.81, Coke climbed by 56 cents to close at $62.75. graphic

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.