Regional Producing Bottlers to Optimize System
Production
Coca-Cola Bottling Co. Consolidated, Coca-Cola
Bottling Company United, Swire Coca-Cola USA, and Coca-Cola
Refreshments to
Coordinate Efficient Operation of Production
Assets
The Coca-Cola Company today took another significant step toward
building a stronger, more streamlined production system in its
flagship market by announcing the formation of a new National
Product Supply System (“NPSS”) in the United States. The mission of
the NPSS will be to facilitate optimal operation of the U.S.
product supply system for Coca-Cola bottlers in order to:
- Achieve the lowest optimal manufactured
and delivered cost for all bottlers in the Coca-Cola system
- Enable system investment to build
sustainable capability and competitive advantage
- Prioritize quality, service and
innovation in order to successfully meet and exceed customer and
consumer requirements
Under the new NPSS, three existing independent producing
bottlers, Coca-Cola Bottling Co. Consolidated (“Consolidated”),
Coca-Cola Bottling Company United (“United”), and Swire Coca-Cola
USA (“Swire”), as well as the Company-owned Coca-Cola Refreshments
(“CCR”) along with Coca-Cola North America, will be members of
Coca-Cola’s National Product Supply Group (“NPSG”). The NPSG will
administer key national product supply activities for these NPSS
bottlers, which currently represent approximately 95 percent of the
U.S. produced volume.
“Our U.S. operating model continues to become stronger, more
aligned and more competitive. Today we are taking further action to
enable profitable growth for our entire U.S. system,” said Muhtar
Kent, Chairman and Chief Executive Officer, The Coca-Cola Company.
“We will leverage the strengths and capabilities of the four
largest producing bottlers in our U.S. system, CCR, Consolidated,
United and Swire to operate as one highly aligned and highly
competitive national product supply system.”
Under the initial terms of the Letters of Intent, it is
anticipated that each NPSS bottler will acquire certain production
facilities from CCR within their transitioning distribution
territories. Initially, it is contemplated that CCR will divest the
following nine production facilities with an estimated net book
value of $380 million:
- Consolidated will acquire production
facilities in Sandston, Va., Baltimore and Silver Spring, Md.,
Indianapolis and Portland, In. and Cincinnati, Oh.
- United will acquire the production
facility in New Orleans, La.
- Swire will acquire production
facilities in Phoenix, Az. and Denver, Co.
The transition of these production facilities from CCR to NPSS
bottlers is anticipated to take place between 2016 and 2018. The
sale of additional production facilities from CCR to NPSS bottlers
in previously announced transitioning distribution territories will
be considered in due course. CCR’s territories will continue to be
refranchised as previously announced and decisions on any remaining
production facilities in those territories will also be considered
at that time.
“The National Product Supply System will benefit all of our U.S.
bottling partners by driving our production system to manufacture
products at the lowest optimal cost,” said Sandy Douglas, Executive
Vice President and President, Coca-Cola North America. “The board
of the NPSG will focus on infrastructure planning, innovation
planning, and optimal sourcing. Importantly, we believe the NPSS
structure allows us to leverage our significant system scale with
the unique competitive advantage of being able to act with speed.
This will be enabled by the outstanding commercial capabilities of
a strong local bottling system.”
The new transactions announced today are subject to the parties
reaching definitive agreements. The parties are committed to
working together to implement a smooth transition with minimal
disruption for customers, consumers and system associates.
About The Coca-Cola
Company
The Coca-Cola Company (NYSE: KO) is the world's largest beverage
company, refreshing consumers with more than 500 sparkling and
still brands. Led by Coca-Cola, one of the world's most valuable
and recognizable brands, our Company's portfolio features 20
billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola
Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del
Valle. Globally, we are the No. 1 provider of sparkling beverages,
ready-to-drink coffees, and juices and juice drinks. Through the
world's largest beverage distribution system, consumers in more
than 200 countries enjoy our beverages at a rate of 1.9 billion
servings a day. With an enduring commitment to building sustainable
communities, our Company is focused on initiatives that reduce our
environmental footprint, support active, healthy living, create a
safe, inclusive work environment for our associates, and enhance
the economic development of the communities where we operate.
Together with our bottling partners, we rank among the world's top
10 private employers with more than 700,000 system associates. For
more information, visit Coca-Cola Journey at
www.coca-colacompany.com, follow us on Twitter at
twitter.com/CocaColaCo, visit our blog, Coca-Cola Unbottled, at
www.coca-colablog.com or find us on LinkedIn at
www.linkedin.com/company/the-coca-cola-company.
Forward-Looking
Statements
This press release may contain statements, estimates or
projections that constitute “forward-looking statements” as defined
under U.S. federal securities laws. Generally, the words “believe,”
“expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and
similar expressions identify forward-looking statements, which
generally are not historical in nature. Forward-looking statements
are subject to certain risks and uncertainties that could cause
actual results to differ materially from The Coca-Cola Company’s
historical experience and our present expectations or projections.
These risks include, but are not limited to, obesity concerns;
water scarcity and poor quality; evolving consumer preferences;
increased competition and capabilities in the marketplace; product
safety and quality concerns; perceived negative health consequences
of certain ingredients, such as non-nutritive sweeteners and
biotechnology-derived substances, and of other substances present
in our beverage products or packaging materials; increased demand
for food products and decreased agricultural productivity; changes
in the retail landscape or the loss of key retail or foodservice
customers; an inability to expand operations in emerging and
developing markets; fluctuations in foreign currency exchange
rates; interest rate increases; an inability to maintain good
relationships with our bottling partners; a deterioration in our
bottling partners' financial condition; increases in income tax
rates, changes in income tax laws or unfavorable resolution of tax
matters; increased or new indirect taxes in the United States or in
other major markets; increased cost, disruption of supply or
shortage of energy or fuels; increased cost, disruption of supply
or shortage of ingredients, other raw materials or packaging
materials; changes in laws and regulations relating to beverage
containers and packaging; significant additional labeling or
warning requirements or limitations on the availability of our
products; an inability to protect our information systems against
service interruption, misappropriation of data or breaches of
security; unfavorable general economic conditions in the United
States; unfavorable economic and political conditions in
international markets; litigation or legal proceedings; adverse
weather conditions; climate change; damage to our brand image and
corporate reputation from negative publicity, even if unwarranted,
related to product safety or quality, human and workplace rights,
obesity or other issues; changes in, or failure to comply with, the
laws and regulations applicable to our products or our business
operations; changes in accounting standards; an inability to
achieve our overall long-term growth objectives; deterioration of
global credit market conditions; default by or failure of one or
more of our counterparty financial institutions; an inability to
timely implement our previously announced actions to reinvigorate
growth, or to realize the economic benefits we anticipate from
these actions; failure to realize a significant portion of the
anticipated benefits of our strategic relationships with Keurig
Green Mountain, Inc. and Monster Beverage Corporation; an inability
to renew collective bargaining agreements on satisfactory terms, or
we or our bottling partners experience strikes, work stoppages or
labor unrest; future impairment charges; multi-employer plan
withdrawal liabilities in the future; an inability to successfully
integrate and manage our Company-owned or -controlled bottling
operations; an inability to successfully manage the possible
negative consequences of our productivity initiatives; global or
regional catastrophic events; and other risks discussed in our
Company’s filings with the Securities and Exchange Commission
(SEC), including our Annual Report on Form 10-K for the year ended
December 31, 2014, and our subsequently filed Quarterly Reports on
Form 10-Q, which filings are available from the SEC. You should not
place undue reliance on forward-looking statements, which speak
only as of the date they are made. The Coca-Cola Company undertakes
no obligation to publicly update or revise any forward-looking
statements.
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The Coca-Cola CompanyScott Williamson, +01-404-676.2683
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