All Remaining North American Territories Will
Be Refranchised By End of 2017, Three Years Earlier Than Previously
Expected
Plans Include the Sale of 39 Remaining North
America Cold-Fill Production Facilities; Latest Agreements Include
Letters of Intent for Territories in Five States
Company Announces Non-Binding Letter of Intent
to Refranchise Company-Owned Bottling Operations in China
The Coca-Cola Company today announced that it is accelerating
the pace and scale of its bottler refranchising efforts with plans
to refranchise 100% of Company-owned North America bottling
territories by the end of 2017, including all cold-fill production
facilities. The Company has also entered into a non-binding letter
of intent to refranchise Company-owned bottling operations in China
to existing partners China Foods Limited, part of COFCO Limited,
and Swire Beverage Holdings Limited, building on other recent
global refranchising initiatives in Europe and Africa.
The Company’s progress and success in transitioning bottling
territories to date has provided the confidence to increase the
pace of transition.
“We have made significant progress on our North American
refranchising initiatives,” said Muhtar Kent, Chairman and CEO, The
Coca-Cola Company. “We continue to negotiate additional agreements
and we are in constant discussion with potential partners who are
excited about investing in the future of the Coca-Cola system in
our flagship market as well as in other markets around the
world.”
Added Kent: “The acceleration of our global refranchising marks
a step change in our efforts to refocus The Coca-Cola Company on
its core business of building strong, valuable brands and leading a
system of strong bottling partners.”
The franchise system is a cornerstone of the Company’s 21st
Century Beverage Partnership Model in North America, a broad
initiative aimed at building on system capabilities to sustain
success. The first letters of intent in the refranchising process
were announced in 2013.
“This has been an important, strategic process that positions
the Coca-Cola system in its flagship market for a great future,”
said J. Alexander “Sandy” Douglas Jr., President, Coca-Cola North
America. “The North American market presents an opportunity to
blend the strengths of a locally focused franchise bottling system
with national production efficiencies and large customer account
management.”
So far, the Company has reached definitive agreements or signed
letters of intent to refranchise territories that account for more
than 40% of bottler-delivered distribution volume in the United
States. The Company’s Coca-Cola Refreshments unit continues to
operate Company-owned territories in North America and will work to
ensure a smooth transition to aligned, new and existing bottling
partners going forward.
As part of this accelerated refranchising effort, the Company
now plans to sell the remainder of its Company-owned cold-fill
production facilities by the end of 2017. These facilities produce
sparkling beverages, such as Coca-Cola trademark brands and Sprite,
along with still brands such as Dasani. The Company expects to
maintain ownership of its hot-fill facilities, which produce brands
such as Powerade and Minute Maid juices. Company-owned hot-fill
operations will supply the entire North America Coca-Cola
system.
Today, the Company announced several deals that represent
additional progress in the overall North America refranchising
process.
New letters of intent provide that:
- Coca-Cola Bottling Co.
Consolidated, based in Charlotte, N.C., will assume additional
territory in portions of Ohio and West Virginia, along with a
production facility in Twinsburg, Ohio.
- Coca-Cola Bottling Company of
Roseburg, based in Roseburg, Ore., will assume territory in the
Pacific Northwest, primarily in southern Oregon and a small portion
of northern California.
- ABARTA, Inc., based in
Pittsburgh, will assume territory in Pennsylvania.
The letters of intent announced today are subject to the parties
reaching definitive agreements. Financial terms are not being
disclosed.
The Company has also closed its previously announced Definitive
Agreement with Coca-Cola Bottling Co. Consolidated and
successfully transitioned additional territory in Maryland and
Virginia, along with a production facility in Sandston, Va.
International Refranchising
Today, the Company is also announcing that it has entered into a
non-binding letter of intent to refranchise Company-owned bottling
operations in China to existing partners China Foods
Limited, part of COFCO Limited, and Swire Beverage Holdings
Limited.
Coca-Cola’s third-largest market by volume, China represents a
significant long-term growth opportunity for The Coca-Cola Company
and its bottling system. The system recently opened its 45th local
plant and is currently investing $4 billion in China for future
growth, building on $9 billion of investments made in the market
since 1979.
Elsewhere, the Company is also focused on refranchising in
markets such as Europe and Africa. This includes the planned
creation of Coca-Cola European Partners in Western Europe and
Coca-Cola Beverages Africa in Southern and Eastern Africa.
History of North America Refranchising
North America is Coca-Cola’s oldest and largest market in the
world. Historically, the Coca-Cola system in the United States and
Canada was comprised of a significant number of small, local
bottlers. Through decades of consolidation, the system evolved to
be comprised of a much smaller number of bottlers. By the early
2000s, the majority of North American bottling territories were
owned by Coca-Cola Enterprises.
A decade ago, The Coca-Cola Company began working with its
bottling partners on plans to develop a model that would evolve the
way the system serves a 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.
In the five years since the deal was closed, The Coca-Cola
Company has accelerated the implementation of the new model by
strategically addressing the franchise system, customer service,
product supply and a common information technology platform.
Ultimately, the Coca-Cola 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 United
States and Canada.
The system also includes a new structure for production of
finished beverages, with cold-fill production being owned by
select, regional producing bottlers and hot-fill and syrup
production remaining under ownership of Coca-Cola North America.
The National Product Supply Group, or NPSG, which has a board
comprised of representatives from Coca-Cola North America,
Coca-Cola Refreshments, Coca-Cola Bottling Co. Consolidated,
Coca-Cola Bottling Company UNITED and Swire Coca-Cola USA, will
administer key activities for NPSG-member bottlers. The board
currently represents approximately 95% of U.S.-produced volume.
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 more than 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 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 Company undertakes no
obligation to publicly update or revise any forward-looking
statements.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160209005821/en/
The Coca-Cola CompanyInvestor Contact:Tim
Leveridge, +01-404-676-7563orMedia Contacts:Scott
Williamson, +01-404-676-2683orKent Landers,
+01-404-676-2683
Coca Cola (NYSE:KO)
Historical Stock Chart
From Feb 2024 to Mar 2024
Coca Cola (NYSE:KO)
Historical Stock Chart
From Mar 2023 to Mar 2024