McDonald's Doesn't Do Dew

Fast feeder ending tests of bottled PepsiCo beverages

OAK BROOK, Ill. -- McDonald's Corp. ended test sales of PepsiCo Inc.'s bottled Mountain Dew and Gatorade, said the Associated Press, handing a victory to Coca-Cola Co., the exclusive fountain-drink provider to the world's biggest restaurant chain.

McDonald's began testing bottled beverages in 2006 to see if they could boost soft-drink sales. It dropped the PepsiCo products from the test in July 2008, PepsiCo spokesperson Larry Jabbonsky told the news agency. He called the test "a great opportunity and a great learning experience."

The decision defuses a threat to [image-nocss] Coca-Cola's five-decade relationship with McDonald's, its largest customer. The chain introduced non-Coca-Cola drinks because it deemed bottled products outside its exclusive fountain agreement with Coca- Cola, sealed with a handshake in 1955 and no written contract.

McDonald's is still testing bottled products from Coca-Cola to attract customers seeking a wider selection of beverages, such as sports drinks and teas, and the convenience of a resealable bottle at the drive-through window.

"We continue to work with other national and regional beverage companiesincluding Coca-Colato identify a variety of fountain and bottled beverage options that will meet our customers' preferences," Danya Proud, a McDonald's spokesperson, told AP.

Atlanta-based Coca-Cola controls about 70% of the U.S. fountain drink market, according to data from Beverage Digest. PepsiCo, based in Purchase, N.Y., controls about 20%.

Coca-Cola's fountain dominance is due in large part to the McDonald's deal. The maker of Diet Coke and Sprite dedicates a standalone division to the hamburger chain and raises the McDonald's flag when executives visit its Atlanta headquarters, said AP.

McDonald's, based in Oak Brook, Ill., has tested bottled drinks in a fraction of its nearly 14,000 U.S. restaurants, including some in the Kansas City, Mo., metropolitan area and College Station, Texas. The test has let McDonald's sell drinks with higher market shares than corresponding Coca-Cola offerings.

Mountain Dew was the fourth-biggest-selling soft drink in 2007 in the United States behind Coca-Cola, Pepsi-Cola and Diet Coke, according to Beverage Digest. Gatorade was the top sports drink, with 76% of supermarket, drug store and convenience store sales. PepsiCo's Lipton teas held 38% of their market.

The chain decided not to sell the PepsiCo products nationally after the test, Proud said.