The deal won't affect Coke's soft-drink brands but the move hobbles Coke's efforts to build distribution for its nascent Minute Maid brand in the region against PepsiCo's well-established Tropicana, in the U.K. market since 1991.
"It just shows the increased competitive nature of PepsiCo and Pepsi, itself," said Michael Bellas, chairman-CEO of consultant Beverage Marketing Corp. "At a time where Coke is looking to regain its competitive edge, they're going up against a very disciplined and increasingly tough competitor. It just shows that Coke has got to earn its keep with McDonald's."
Last month, fast-food giant McDonald's began testing competing juice brands amid plans to recast its breakfast menu with a major ad campaign. McDonald's also will add PepsiCo's Quaker Oats' Oatso Simple cereal, said a PepsiCo spokesman, who added that product will be in restaurants by Oct. 11.
McDonald's executives didn't immediately return calls.
"We were aware of McDonald's isolated decision in Great Britain regarding a very small part of our business there," a Coca-Cola Co. spokesman said. "We continue to supply McDonald's with the full range of the Coca-Cola Co. products in 119 countries where we do business together as we have done for 49 years."