Key Moments
- Royal Unibrew shares dropped more than 20% after the brewer announced it will discontinue its PepsiCo licensing agreement in key Northern European markets when contracts end in 2028.
- The affected PepsiCo agreements represent about 13% of group revenue and include German border trade, while the BeNeLux partnership will continue beyond 2028 under current terms.
- Royal Unibrew plans around DKK 300 million in transition costs and still targets long-term organic EBIT growth of 6-8%, with absolute EBIT expected to surpass 2028 levels from 2030.
Market Reaction to Licensing Exit
Royal Unibrew shares fell more than 20% on Tuesday after the Danish beverage producer revealed it will terminate its PepsiCo licensing relationship in several key Northern European territories once the current contracts conclude in 2028. The move affects agreements that account for roughly 13% of the group’s total revenue.
The existing license arrangements, which also include German border trade, are scheduled to run until the end of 2028. Royal Unibrew stated that it had sought to prolong the collaboration but ultimately could not secure new terms.
Strategic Rationale and CEO Commentary
Chief executive Lars Jensen framed the decision as a strategic pivot despite the company’s preference to maintain the partnership.
“While ending the partnership was not our preferred outcome, the contract expiry in 2028 will remove a number of structural constraints,” chief executive Lars Jensen said in a statement. “This gives us flexibility to further accelerate the growth of our own brands and to explore new partnership opportunities.”
The brewer emphasized that its licensing agreement with PepsiCo in BeNeLux is not part of the exit and will continue beyond 2028 under existing contractual conditions.
Operational Changes from 2029
Starting in 2029, Royal Unibrew will cease producing, selling, and distributing PepsiCo products in the markets covered by the expiring agreements.
The company expects to mitigate part of the revenue impact by accelerating its portfolio of proprietary brands, including Faxe Kondi, Jaffa, and Novelle. According to Royal Unibrew, these brands have consistently delivered stronger performance than the broader soft drinks market in recent years.
| Item | Details |
|---|---|
| Share price reaction | More than 20% decline on Tuesday |
| Revenue exposure | Approximately 13% of group revenue affected |
| License expiry timing | End-2028 for Northern European and German border trade agreements |
| BeNeLux agreement | Unchanged, continues beyond 2028 under existing terms |
| Estimated transition costs | Approximately DKK 300 million |
| Long-term organic EBIT growth target | 6-8%, unchanged |
Margin Profile and Investment Requirements
Royal Unibrew highlighted that the profitability of its in-house brands is structurally higher than that of licensed products. The company expects the conclusion of the PepsiCo agreement to release production capacity and lower capital expenditure needs.
The brewer guided for transition-related costs of approximately DKK 300 million. These expenditures are intended to support the acceleration of its own brands from 2029 onward and to cover potential costs associated with exiting the licensing arrangements.
Royal Unibrew cautioned that precisely quantifying the financial consequences remains difficult due to the number of variables involved.
Outlook Through 2030 and Beyond
The company reiterated that its long-term organic EBIT growth target of 6-8% remains intact. It expects to achieve EBIT growth consistent with that objective through the end of 2028.
For the 2029 financial year, Royal Unibrew anticipates a decline in both net revenue and volumes as the PepsiCo products roll off. From 2030, the brewer expects its absolute EBIT to exceed 2028 levels.
Jensen also addressed the company’s positioning in the cola segment following the end of the PepsiCo deal. He said Royal Unibrew’s cola offering would persist beyond 2028, noting that cola continues to represent an important, though gradually shrinking, portion of the soft drinks category.
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