Royal Unibrew is confronting broad analyst downgrades after confirmation that its Pepsi bottling agreement in several Nordic and Baltic markets will end at the close of 2028. The loss prompted Deutsche Bank to lower its rating to "hold" from "buy" and Goldman Sachs to move to "neutral", with both brokerages revising down FY29 earnings forecasts materially on business that represents roughly 13% of group revenue.
Deutsche Bank analyst Mitch Collett quantifies the exposure as equivalent to losing 13% of 2025 group revenue in the 2029 financial year. Collett notes that the volumes being relinquished carry an expected gross profit margin of 30% and an EBIT margin of 13%, figures he describes as broadly consistent with other bottling businesses.
Under Collett's scenario, Royal Unibrew would be able to recover only half of the related selling, general and administrative costs, while also facing DKK300 million in additional costs tied to the contract exit. Those assumptions translate into an estimated 17% organic decline in EBIT year-on-year for 2029, even after applying an 8% EBIT growth assumption for the rest of the group's operations.
Goldman Sachs analyst Aron Adamski has also sharply reduced his outlook. Adamski cut his price target by 29%, driven by an increased WACC of 8.9% (from 8.2%) and a lower target P/E multiple of 12.5x versus 17.5x previously. His modelling trims FY29 sales, EBIT and EPS by 12%, 27% and 29% respectively.
Adamski's revised forecasts show an EPS compound annual growth rate below 5% for FY25-30, a marked slowdown from the more than 9% CAGR he had modelled earlier. He expects Royal Unibrew to underperform peers such as Carlsberg and CCEP and indicates that investors are likely to doubt the company's ability to achieve FY30 EBIT above FY28 levels, forecasting an approximate 9% shortfall. Adamski additionally warns of a higher risk premium likely to be applied to Royal Unibrew's remaining Pepsi licences in BeNeLux, which account for about 5% of sales.
The market reaction was sharp: the share price fell by about 25% on the day the termination was announced.
Investment bank Citi, in a sector note, highlights the beneficiaries of the switch. Citi says the termination, which covers Denmark, Finland, Latvia, Estonia and Lithuania, should be viewed positively by Carlsberg, which has confirmed it will assume Pepsi bottling responsibilities in those markets from January 1, 2029.
Citi also points to CCEP as the likely frontrunner to replace Carlsberg as the Coca-Cola bottler in Denmark and Finland when that agreement expires on December 31, 2028. The bank flags that any impact to Carlsberg's earnings per share over the longer term would likely be small - in the low single digits, according to Citi's assessment.
Market context and immediate implications
The broker revisions reflect analysts' attempts to translate the loss of a significant branded-bottling contract into concrete effects on revenue, margins and corporate profitability. The assumptions applied by the brokers differ in detail but converge on a material near-term reduction in Royal Unibrew's EBIT and EPS, and on investor scepticism around near-term recovery to pre-termination EBIT levels.
What remains uncertain
- Whether Royal Unibrew can recover more than 50% of related SG&A costs or limit incremental exit costs below the DKK300 million figure used by Deutsche Bank.
- The degree to which remaining Pepsi licences, notably in BeNeLux and other markets, will face a higher risk premium from investors.
- How quickly displaced volumes will be absorbed by Carlsberg and CCEP and what competitive or contractual developments may follow.
The developments are likely to affect beverage sector valuations and investor appetite for bottlers with concentrated branded contracts. Analysts and investors will be watching Royal Unibrew's next public comments and any further revisions to its guidance closely.