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Tempo agreed yesterday to a deal to sell 40 percent of the Netanya-based company's subsidiary, Tempo Drinks, to Dutch beer-maker Heineken for $14.5 million. Tempo will use the funds to build a $10 million local beer factory for Heineken. Tempo will begin marketing Heineken in half-liter recycled bottles prior to transfering production here, allowing it to reduce costs to the consumer by 20 percent.

According to Heineken International president Jean Francois van Boxmeer, his company would be involved in more than just beer operations as a stockholder in Tempo. Heineken is also the franchise holder of Pepsi in the Netherlands and knows the difficulty of competing with Coca-Cola. Tempo's soft drink division's woes dragged the whole company into the red in 2004.

Controlling shareholder Jacques Bar deems the deal a turning point for the company, adding that Tempo has put together a plan to become profitable by the end of 2005. The global trend in carbonated drinks is working in Tempo's favor, Bar believes, and consumers are switching over to sugar-free drinks, where Tempo's Pepsi Max has beaten out Diet Coca-Cola in taste tests.

The Heineken-Tempo partnership will not be limited to Israel, said Bar. He indicated that the Heineken distributor in New York would begin marketing its Goldstar beer to the secular population there. Tempo's Maccabee beer is currently distributed in 20 countries to those seeking a kosher certificate.

Tempo CEO Rafi Baharav said, "We'll deliver respectable returns if we stem soft drink losses," adding that the company began selling fresh squeezed juices under the Cider Hagalil label. The decision to focus on Cider Hagalil will help Tempo obtain the same market share as its competitors Prigat and Primor, according to Baharav.