Inside the Pepsi-Cola Jamaica plant, 214 Spanish Town Road, Kingston. Pepsi Jamaica paid Red Stripe $402m for the property. - Junior Dowie/Staff Photographer

Pepsi-Cola Jamaica Bottling Company Limited is to have a new ownership structure, following the sale of 82 per cent of its Caribbean holdings by parent PepsiAmericas.

On Monday, PepsiAmericas announced that it had reached a deal with Central America Beverage Corporation (CABCORP), giving controlling interest to its new joint venture partner.

The deal, which combines PepsiAmericas' Caribbean operations - except Bahamas - with CABCORP, is not expected to be consummated before year end, and only after regulatory approval.

But on Monday, PepsiAmericas told Wednesday Business that while the deal should see more of CABCORP brands being distributed in the region, no disruptions were expected.

82/18 partnership

The deal will likely affect eight countries, including Jamaica, Trinidad and Tobago, Puerto Rico, Barbados, which will now be merged with CABCORP's Central American operations of Guatemala, Honduras, El Salvador and Nicaragua.

"We have signed an agreement which, when it closes, will make this joint venture an 82/18 partnership, with CABCORP the majority stakeholder in the Pepsi business in Jamaica," said Mary Viola, press spokeswoman for PepsiAmericas.

The management structure will be tweaked, though Viola maintained country operations are expected to remain largely intact.

"CABCORP intends to work with the current management teams in each operation. They will add a few key management positions such as a new Caribbean CEO and other management personnel that will continue with the implementation of the business plan and develop a strategic plan," she said.

Value of local management

"CABCORP, being a company that operates in four different countries, understands and appreciates the value of local management," she said.

CABCORP, is a Guatemalan company which was named in 1998 as PepsiCo's main bottling company in Central America.

Like Jamaica, PepsiAmericas' other Caribbean operations will be owned 82 per cent by CABCORP with PepsiAmericas controlling the remaining 18 per cent.

Viola declined to disclose the value of the deal which is expected to close by the third quarter of the year.

It comes weeks after Pepsi-Americas rejected PepsiCo's offer to buy the 57 per cent of PepsiAmericas it doesn't already own.

PepsiCo made the nearly US$1.7 billion cash-and-stock offer last month.

PepsiAmericas' Caribbean businesses include Jamaica, Trinidad and Tobago, Puerto Rico as well as Barbados and The Bahamas, each of which operates bottling and distribution centres.

The PepsiAmericas/CABCORP deal, however, does not include the Bahamas operation.

Closed its door

No reason was provided for the exclusion of The Bahamas up to press time, but last year media reports emanating out of the multi-island state said Pepsi-Cola on the Grand Bahama had closed its door.

Other wire reports said that the sales and distribution operations were closed due to profitability challenges.

While the Jamaican business, which is run by Andrew Reid, is expected to remain the same, growth is expected through an expanded portfolio of beverages.

Specific details were not given but CABCORP brands include carbonated beverages such as Mirinda, Rica, Belight and Squirt.

It manufactures and distributes energy drinks such as Adrenaline as well as natural juices, namely Campestre, Petit and California nectar as well as beers and Lipton tea.

Expanded product portfolio

"In addition to the strong PepsiCo brands, the combined business will produce and sell an expanded product portfolio across these territories," PepsiAmericas press release stated.

"Right now, I don't have any specifics on portfolio expansion in Jamaica," added Viola.

PepsiAmericas brands include Pepsi-Cola, Tropicana, Schweppes, and Toma.

While PespsiAmericas does not provide country breakouts, Viola noted that the Caribbean business accounted for 5.0 per cent of PepsiAmericas' total revenue last year - amounting to US$245 million of $4.9 billion.

Sales grew 10 per cent that year across the group.

Pepsi Puerto Rico accounts for more than 60 per cent of the Caribbean's total net sales which topped US$64 million in the fourth quarter.

The Caribbean, however, reported an operating loss of US$600,000.

"A strategic restructuring of the Caribbean business was initiated in the third quarter to streamline operations and improve profitability, resulting in a $9 million special charge for the full year," Pepsi-America said in its four quarter financial highlights.

Caribbean net sales for the first quarter just ended in April were $48.1 million, down 12 per cent from the prior year quarter due to a 14 per cent volume decline and the impact of foreign currency.

PepsiAmericas is the world's second-largest manufacturer, seller and distributor of PepsiCo beverages and operates 33 manufacturing facilities and over 175 distribution centres across its markets.

sabrina@gleanerjm.com