$4.3B In Soft Drinks: Carlsberg Acquires Britvic In Bold Move Amid Cannabis Market Growth


Carlsberg's (CARL-B.CO) recent $4.3 billion acquisition of Britvic, known for Robinsons squash and J20, highlights a strategic pivot for the Danish brewer. The deal will create a new entity, Carlsberg Britvic, to enhance its footprint in the UK and Western Europe. Following a previously rejected lower offer, Britvic investors will receive £13.15 per share.

Navigating A Changing Market

The move comes as Carlsberg navigates a market where younger consumers are less inclined towards alcohol.

Diversification into non-alcoholic beverages could be interpreted as a proactive measure to capture growth in multiple drink sectors. Britvic's strong financial performance, with a 6.3% revenue increase to £502.9 million for the quarter ending June 30, underscores its market strength.

Strengthening Partnerships And Portfolio

Carlsberg’s acquisition also includes Britvic's exclusive license with PepsiCo PEP to produce and sell brands like Pepsi, 7Up and Lipton iced tea in the UK.

This partnership with PepsiCo is set to expand, streamlining bottling operations across Europe. Concurrently, Carlsberg is buying Marston’s MARS 40% stake in their UK brewing joint venture for £206 million, indicating beer remains central to its portfolio.

Read Also: Daily Cannabis Consumption Outpaces Daily Alcohol Use In The US For The First Time, New Study Shows

Financial And Strategic Implications

The strategic importance of this acquisition is underscored by the significant cost efficiencies anticipated—£100 million annually. Carlsberg’s CEO, Jacob Aarup-Andersen, emphasized the value accretion expected by year three of the deal. “This is about creating long-term shareholder value,” he said

A Response To Cannabis Market Growth? 

In the context of the broader beverage market, Carlsberg’s diversification can be seen as a response to the cannabis sector's rapid growth.

According to Beacon Securities, the cannabis sector's EBITDA Compound Annual Growth Rate (CAGR) from 2023 to 2025 is projected at 65% for Canadian producers and 42% for U.S. operators, significantly outpacing the alcohol sector's 6% CAGR.

This suggests a potential market undervaluation, presenting investment opportunities in cannabis over traditional beverage industries.

Changing Consumption Patterns

A 2024 study in the journal Society for the Study of Addiction reveals that for the first time, daily cannabis consumption has outpaced daily alcohol use in the U.S. This shift, which has been 40 years in the making, coincides with the growing legalization and mainstream acceptance of marijuana across nearly half of U.S. states.

According to the study, the per capita rate of daily cannabis consumption has increased nearly 15 times since 1992. By 2022, an estimated 17.7 million Americans reported using marijuana daily or near-daily, compared to 14.7 million daily or near-daily alcohol drinkers.

This significant change in consumption patterns suggests a broader trend toward cannabis use, particularly as public acceptance and legal reforms continue to evolve.

As Carlsberg seeks to diversify, it remains to be seen whether this acquisition marks a one-off event or a broader trend among alcohol producers to mitigate market share loss to the burgeoning cannabis industry.

Read Next: Cannabis Now Surpasses Alcohol: 'This Trend Will Continue for Decades,' Says Expert

These issues will be a hot topic at the upcoming Benzinga Cannabis Capital Conference in Chicago this Oct. 8-9. Join us to get more insight into what the wave of weed legalization means for the future of investing in the industry. Hear directly from top executives, investors, advocates, and policymakers. Get your tickets now before prices go up by following this link.

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