Soup's On for CCH, CPB in Russia

Coca-Cola Hellenic Bottling Company (CCH - Analyst Report) has announced that the company will distribute Campbell’s soup and broth products in Russia. Under the terms of an agreement with Campbell Soup (CPB - Analyst Report), Coca-Cola Hellenic will be responsible for sales, distribution, in-store marketing and trade receivables management for the soup and broth products, while Campbell’s will be responsible for brand management, market research, marketing, product development and production.

Coca-Cola Hellenic already distributes Campbell’s Domashnaya Klassika products in the Moscow region. In August this year, CCH will expand the distribution of Domashnaya Klassika products to over 100 cities in Russia. The nationwide Russian distribution network will follow.

Campbell’s entered the Russian market in 2007, and hopes to capitalize on the Russia soup market, which is more than twice the size of the U.S. market. However, so far, Campbell’s distribution has been limited to four broths (mushroom, beef and mushroom, chicken and beef) in the Moscow area. In order to accelerate its penetration of the Russian market, Campbell Soup is procuring the aid of Coca-Cola Hellenic.

Coca-Cola Hellenic has a distribution infrastructure in Russia, which it can leverage to supply complementary products. For Coca-Cola Hellenic, the addition of Campbell soup and broth products will not only be profitable, but also strengthen the bottler’s relationships with existing customers.

Remember from last week’s blog, Coca-Cola Hellenic is buying back shares almost every day after the Board of Directors approved a buy-back of up to 5% of the company’s paid-in capital over the next two years. On average, the company continues to repurchase approximately 25,000 shares every day.

We continue to rate the stock a Buy. Coca-Cola Hellenic Bottling Company is one of the largest bottlers of non-alcoholic beverages in Europe. Campbell’s is rated a Hold.

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