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Nestle and Coke Are Ending Their Nestea Iced Tea Venture After 16 Years

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Nestle this month will relaunch a new Nestea, the biggest brand overhaul in the tea's history.Courtesy of Nestle

Nestle and Coca-Cola (KO) have agreed to end their Nestea iced tea joint venture after 16 years and pursue separate strategies in the fast-changing bottled drinks market.

The companies formed Beverage Partners Worldwide in 2001 to sell Nestea around the world but the brand has faced fierce competition from Lipton iced tea, which is sold by a venture between Unilever (UL) and PepsiCo (PEP).

Consumers are also moving away from sweetened bottled drinks toward water due to concerns about health and the environment.

Nestle (NSRGY) announced a revamp of the Nestea brand last month, changing its formula and packaging. The new fruit-flavored Nestea drinks are made with sugar and stevia and have no corn syrup, artificial colors and flavors, nor GMO ingredients.

“The ready-to-drink tea market has evolved, and Nestle believes the time is right to develop Nestea independently,” the company said on Friday, announcing the end of the venture that had already been scaled back to just Europe and Canada in 2012.

Nestle said on Friday that Coke would retain a license to make and sell Nestea in Canada, Spain, Portugal, Andorra, Romania, Hungary and Bulgaria.

The Nestle Waters division, which manages the brand in several countries including the United States, will also manage Nestea in European countries not affected by the licensing agreements with Coke, it said.