Czech KMV snaps up Pepsi drinks and snacks in Central Europe

Karlovy Vary based Czech mineral and bottled waters giant Karlovarské Minerální Vody (KMV) has taken a significant step in boosting its portfolio of products and its turnover.

Photo: archive of PepsiCo

KMV announced this week that it has sealed the deal to take over US drinks and snacks company, Pepsi’s, franchises and operations in the Czech Republic, Hungary, and Poland. The deal considerably widens the Czech company’s drinks portfolio, by adding colas as well as other drinks, and should boost its turnover by around 50 percent to more than 12 billion crowns.

The transaction still has to be cleared by competition authorities in the three countries. KMV announced though that it expects the deal to be finalised in the first half of this year.

In specific terms, KMV gets the rights to sell Pepsi, Mirinda, 7Up, Gatorade, Lipton, and Toma juices, amongst other in the three countries. It will also be able to sell Lays crisps and Cheetos snacks. The deal covers two Pepsi manufacturing sites and around 900 workers. Pepsi narrowed losses at its Czech operation to around 8.7 million crowns last year, according to reports.

It’s not the first time KMV has cornered a Pepsi franchise in Europe. That step already too place in Bulgaria last year when the Czech company bought up the Bulgarian franchisee.

KMV already dominates many national mineral and natural water markets in the region. It is the biggest mineral and natural water seller in the Czech Republic with its flagship Mattoni water perhaps its best known product. In Austria, KMV occupies second place for mineral water and third place for flavoured waters. In Slovakia it comes second for mineral water sales and is also leads the Hungarian market for natural water sales.

KMV, in the hands of its Italian owners the Pasquale family, who bought up the Czech mineral water company in the 1990s, has successfully taken mineral water sales and expanded them from the initial restaurant market to supermarkets and the wider public. The product range has been vastly expanded with various flavoured mineral waters and drinks.

But the company’s expansion and marketing practices have also resulted in a series of competition complaints against it on the Czech market with rivals claiming that sharp practices were used to squeeze them out of the market. KMV was also on one occasion fined by the competition office for putting curbs on its distributors who which were judged to have limited competition on the market. It also attempted to sidestep a competition office decision which banned it from taking control over one rival Czech miner water producer.