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Coca-Cola Co. Provides Update On North American Refranchising Initiative

Posted On: 8/4/2016

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TAGS: Coca-Cola Co., Coca-Cola North American bottling system, Coca-Cola Bottling Co. of Yakima, National Product Supply Group

ATLANTA -- Coca-Cola Co. has announced several agreements that further its plan to reshape its North American bottling system. Financial terms were not disclosed.

Coca-Cola Bottling Co. of Yakima, WA, expects to add territory in Moses Lake, WA. This is a portion of the Pacific Northwest territory that was previously announced under a letter of intent with Swire Coca-Cola USA. Coca-Cola Refreshments, a subsidiary of Coca-Cola Co., currently has exclusive distribution rights in this territory.

Durham Coca-Cola Bottling Co. of North Carolina expects to add territory in Sanford, NC. Coca-Cola Enterprises (CRR) currently has exclusive distribution rights in this territory.

The National Product Supply Group (NPSG), which was formed to administer key activities for member bottlers, expects to add to its membership. It currently has five members and a sixth, previously announced incoming member. The two additional members are Coca-Cola Beverages Florida and the newly created Midwest Regional Product Supply Group (Midwest RPSG). The Midwest RPSG will be led by Rosemont, IL-based Great Lakes Coca-Cola Distribution and is expected to include other Midwest bottlers.

Coca-Cola also said Viking Coca-Cola Bottling Co. of St. Cloud, MN, has reached a definitive agreement for territories in parts of Minnesota, Wisconsin and Michigan.

Great Lakes Coca-Cola Distribution has reached a definitive agreement to acquire production facilities in Alsip and Niles, IL, Eagan, MN, and Milwaukee. Great Lakes has also closed deals for seven distribution centers in the Midwest.

These agreements are part of a plan to refranchise all of Coca-Cola's North American territories by the end of 2017.

Coca-Cola Co. began working with its bottling partners a decade ago on plans to develop a model that evolves the system to serve the changing customer and consumer landscape, with a focus on creating stronger system alignment. A critical step was the company's acquisition of the North American territories of Coca-Cola Enterprises in 2010.

Since the closing of the transaction involving the North American territories with Coca-Cola Enterprises, Coca-Cola has accelerated the implementation of the new model by strategically addressing the bottling system, customer service, product supply and a common information technology platform.

Ultimately, Coca-Cola says its system in North America will be comprised of economically aligned bottling partners that have the capability to serve major customers, coupled with the ability to maintain strong, local ties across diverse markets in the U.S. and Canada.

So far, the company has reached definitive agreements or signed letters of intent to refranchise territories that account for approximately 65% of total U.S. bottler-delivered distribution volume (71% of total Coca-Cola Refreshments volume). The company has also reached definitive agreements or signed letters of intent for 43 of the 51 cold-fill production facilities in the U.S.