Royal Unibrew: Pivoting Beyond PepsiCo with a Focus on Own Brands and Southern Growth Engines

The Strategic Pivot

Royal Unibrew’s first half of 2026 was a study in strategic adaptation. The headline was the confirmation that the Northern Europe PepsiCo partnership will wind down by the end of 2028, a fact already announced in April but whose operational implications are now being felt. CEO Lars Jensen made clear the company is not standing still: “the clear answer is that, of course, after '28, the biggest opportunity that sits in the Cola segment” – a direct acknowledgement that the company must fill a significant distribution and portfolio gap. The response is a deliberate reallocation of resources and capital toward areas where growth is compounding: Italy and International.

This pivot is evident in the keyword momentum for the quarter, where “Italy” and “International” saw the largest spikes in the company’s own keyword trajectory. The H1 numbers bear this out: International delivered organic volume growth of 11% and revenue growth of almost 9%, with CEO Jensen noting that “the biggest growth opportunity we have is still doing it better in the markets where we're already present.” Italy continues to gain market share in a flat market, driven by strong lager brands like Ceres and the Crodo soft drink portfolio. Jensen highlighted that “the majority of our growth is deriving from off-trade” and that the growth is “sustainable.”

Managing the Cost Front

The other major theme of the call was cost inflation. The company reported an 80 basis point improvement in EBIT margin to 13.3%, despite “increasing inflation across energy, raw materials, consumables and transportation costs.” CFO Lars Vestergaard explained that while hedges on aluminum and energy are in place for 2026, “when you look into '27, we do not have hedges from the past. So here, you will see a step-up in cost, in particular, on packaging material.” This implies a need for pricing and mix actions into next year.

On pricing, Jensen was matter-of-fact: “we are, as I last said earlier on, we're all in the same boat. Everybody is going to see the same amount of price increases on COGS.” He noted that the industry is broadly raising prices, and Royal Unibrew is working on price pack architecture and category mix to offset the pressure. The company also announced a new DKK 300 million share buyback, signaling confidence in cash flow despite the headwinds.

So if you take Easter out of the equation, as we are trying to do by focusing on the first half, if you're taking the summer swings that naturally is there, we had a slight growth on volume underlying in the total Northern Europe European business. And that is – when you're talking about the consumer sentiment, small skew towards off-trade than on-trade and a small skew towards the non-alcoholic portfolio than the Alcoholic portfolio.

The Northern Europe segment, the largest at 64% of revenue, delivered only modest volume growth, but the company is framing this as a market share game rather than a volume game. Jensen stated that “consumers are not drinking more, they're drinking differently,” and the company is benefiting from the shift toward non-alcoholic and RTD categories. In Finland, the long drink (original laundering) category is declining, but the company is innovating with new hard seltzer lines to capture the same consumer at a lower price point. In Norway, the announcement of a Dr. Pepper license – to be brought in-house from 2027 – is a key pillar of the non-alcoholic expansion.

Own Brands as the Growth Engine

The emphasis on own brands is a recurring theme. Faxe Kondi and its Booster variant are gaining share in energy drinks and CSD across multiple markets. The company is deliberately shifting marketing spend from partner brands to own brands, with Jensen noting that “we do believe in building brands. This is the core of how we think about our business.” The growth categories (RTD, energy, water, etc.) now account for 62% of group net revenue and grew over 6% in H1.

The strategic reallocation is not without short-term pain. Northern Europe EBIT margin came in at 13.0%, slightly below consensus, partly due to accelerated amortization of PepsiCo-related intangibles (DKK 6 million in H1, repeating in H2) and increased marketing behind Faxe Kondi and other own brands. Jensen defended the region’s performance: “We actually – we do not see a weakness in Northern Europe. We see a strength. And when you look at it mathematically, it's small money that makes a difference.”

Looking ahead, the company reiterated its full-year guidance of 6-10% organic EBIT growth, with the midpoint still the most likely outcome. CFO Vestergaard noted that the second half typically sees an acceleration, and the company has better tools to offset inflation now than in Q2: “we see ourselves better positioned far better positioned to cope with that for the second half of the year.”

Why It Matters

Royal Unibrew is at a pivotal moment. The loss of the PepsiCo distribution rights in Northern Europe forces a reimagining of its portfolio and geographic mix. The early signs are that the company is leaning into high-growth, high-margin niches – Italy, International, and own brands – while managing the cost cycle pragmatically. The market has yet to fully price in the potential of these shifts, and the company’s ability to execute on the 2029 transition will be the key investment thesis over the next 24 months.