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    Coca-Cola, Danone Expand Alliance

    New partnership expected to give Coke more lower-priced products.

    ATLANTA -- Coca-Cola Co. today announced a partnership for the production, marketing and distribution of Groupe Danone's retail bottled spring and source water business in the United States.

    In April, the companies reached a deal that gave Coke distribution rights to Danone's Evian water brand in North America. Under the new agreement, Danone will contribute the assets of its retail bottled spring and source water business in the United States, including five production facilities, a license for the use of the Dannon and Sparkletts brands as well as ownership of several value brands. In addition to a cash payment for a 51-percent equity interest in the partnership, Coke will provide marketing, distribution and management expertise.

    The transaction is expected to close over the next few weeks, the companies said in a statement.

    "This partnership enhances our water strategy in the United States by allowing us to participate fully in the fast-growing retail water category for the entire Coca-Cola system," said Jeff Dunn, president and chief operating officer of Coca-Cola North America. "By expanding our water brands to include a national offering in all sectors of the water category with purified, spring and source waters, we can better satisfy the needs of more consumers and occasions, and offer our bottling partners and retailers a more compelling value proposition."

    Coke already owns Dasani, a mid-priced water that has become the second-biggest seller in the United States, after PepsiCo's Aquafina. As master distributor of Evian, Coke also has an entrant in the top end of the market, the Atlanta Journal-Constitution reported.

    The partnership with Danone gives Coke strong representation in the important low-priced segment with the Dannon and Volvic brands. For Danone, it could mean a way to shore up sales of Dannon water, which has been struggling.

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