Burger King has signed a deal making PepsiCo the exclusive soft drink supplier in more than 1,000 restaurants in Latin America and the Caribbean.
The agreement is a win for PepsiCo as it pushes to take soft drink fountain business from Coca-Cola Co., which previously had most of Burger King's business in Latin America.
PepsiCo also hopes to find opportunities for product from its Quaker division to be sold at Burger King restaurants around the world. The Quaker group includes oatmeal and other breakfast items, among other products.
Massimo d'Amore, chief executive of PepsiCo Beverages Americas, recently told trade journal Beverage Digest that disrupting Coca-Cola's dominance in the soft drink fountain business is a priority.
The Burger King system in Latin America and the Caribbean has typically been split between Coca-Cola and PepsiCo. Coca-Cola will still be sold in Burger King restaurants in 11 countries.
The deal may affect Coca-Cola's relationship with Burger King in North America, which is one of its largest fountain accounts. Coca-Cola remains Burger King's largest provider of beverages around the world.
Burger King restaurants in the United States are obligated to purchase a specified number of gallons of soft drink syrup from Coca-Cola, according to a contract signed in 2000. As of Dec. 31, 2010, Burger King estimated that it could take about 14 years to complete the deal. If the agreement was terminated, Burger King would have to pay "significant" fees, according to a recent filing with the Securities and Exchange Commission.
Burger King said the partnership will bring PepsiCo's product lineup to nearly 90 percent of its Latin American and Caribbean markets and allow it to tap the potential of PepsiCo's big snack business.
Coca-Cola has a huge lead in the Mexican and Brazilian soft drink markets. Beverage Digest estimated that Coca-Cola has 71 percent of the Mexican market, to PepsiCo's 15 percent. In Brazil, Coca-Cola has 57 percent to PepsiCo's 9 percent.
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