Royal Unibrew fell sharply in trading on Tuesday, with the Danish beverage group’s shares down more than 20% after it announced it would not be renewing licensing agreements with PepsiCo in a set of Northern European territories when the contracts end in 2028. The company said the affected markets accounted for roughly 13% of group revenue.
The licensing arrangements, which include German border trade, are set to lapse at the end of 2028. Royal Unibrew said negotiations to secure a renewed partnership were unsuccessful despite the company’s preference to continue the relationship.
Company statement and immediate effects
Chief Executive Lars Jensen said in a statement: "While ending the partnership was not our preferred outcome, the contract expiry in 2028 will remove a number of structural constraints." He added that the expiry provides Royal Unibrew with greater flexibility to speed up the expansion of its own brands and to seek new partnership opportunities.
The company clarified that the PepsiCo arrangement in the BeNeLux region is unaffected and will remain in place beyond 2028 under the existing contractual terms. From 2029 onward, Royal Unibrew will no longer produce, market, or distribute PepsiCo-branded products across the territories covered by the agreements that expire.
Strategy shift toward own brands
Royal Unibrew said it expects part of the revenue lost from ending the PepsiCo licences to be offset by faster growth of its proprietary soft-drink labels, naming Faxe Kondi, Jaffa and Novelle as the core brands it intends to scale. The company noted that these own brands have consistently outperformed the broader soft drinks market in recent years.
Management also highlighted structural advantages of promoting in-house brands, stating that the margin profile of these products is higher than that of licensed brands. Ending the PepsiCo deal is expected to free up production capacity and reduce capital expenditure requirements, according to the company.
Financial outlook and costs
Royal Unibrew has guided for transition-related costs of approximately DKK 300 million to support the acceleration of its own-brand strategy from 2029 and to cover potential exit expenses tied to the contract termination. The company cautioned that precise financial outcomes are uncertain because of the number of variables involved in the transition.
The company reiterated its long-term organic EBIT growth target of 6-8% and said it expects to deliver EBIT growth in line with that target through the end of 2028. For the 2029 financial year the company expects reductions in both net revenue and volumes. From 2030, Royal Unibrew expects absolute EBIT to be higher than 2028 levels.
Jensen noted that the company’s cola offering will continue after 2028, while acknowledging that cola represents a significant but gradually declining portion of the soft drinks category.
Market reaction
Investors reacted negatively to the news, sending the stock down more than 20% on the day of the announcement. The company has signalled a multi-year transition with concentrated effects in the near term and potential recovery in absolute earnings beyond 2029.