Buying Orangina Schweppes: globalizing the drinks arm (2009)

Growth bought, not built

The logic of the Orangina Schweppes deal was that a soft-drink line whose home market had stopped growing could only get bigger by buying its way abroad. Newly carved out as a standalone company in 2009, Suntory’s beverage arm reached for about €3 billion of European brands — the Schweppes mixers and the Orangina drink — in a single move, rather than trying to build a European business from nothing over decades. It was the clearest expression of a habit that runs through the whole group from Torii Shinjiro on: when a business is missing a piece, acquire the piece. The same reflex would take it to Lucozade and Ribena, to Frucor in the Pacific, and to Japan Beverage at home.

What the deal bought was reach and a four-region map; what it committed the company to was carrying acquired brands, goodwill and debt on the thin margins of the drinks trade, and earning its purchases back across currencies it did not control. That is the double edge of growth-by-acquisition — it turned a mid-sized Japanese company into the world’s third-largest soft-drink group far faster than organic growth ever could, but it also set the pattern in which the group would later have to prune, selling out of markets that did not pay even as it kept buying into ones that might. The 2009 purchase is where that pattern begins.