Coke to Consolidate U.S. Bottlers Under New Supply System
September 24 2015 - 8:40AM
Dow Jones News
By Chelsey Dulaney
Coca-Cola Co. said Thursday that it plans to bring some of its
top U.S. bottlers together under a new supply system, the soda
giant's latest move to cut costs amid tepid sales.
Coke said the new national supply group will include independent
bottlers Coca-Cola Bottling Co. Consolidated, Coca-Cola Bottling
Company United, Swire Coca-Cola USA and the company-owned Coca-Cola
Refreshments and Coca-Cola North America. Together, the bottlers
account for 95% of the volume produced in the U.S.
The initial terms of the agreement call for Coca-Cola
Refreshments, which is owned by Coke, to divest nine production
facilities valued at about $380 million to the other bottlers
between 2016 and 2018.
Coke Chief Executive Muhtar Kent said the company will tap the
strengths of the four biggest-producing bottlers in its system to
operate a streamlined, "highly competitive" national supply
system.
Coke has been working to restructure its North American
manufacturing operations and speed up its refranchising efforts. It
has said it is looking to refranchise the majority of its
distribution in the next few years.
The changes come as the beverage giant has seen its soda volumes
slip as health-conscious consumers scale back. The company has also
been hurt by turbulence in emerging markets, which formerly
supplied much of its growth. In July, Coke reported improving
results in its second quarter as noncarbonated drinks like tea,
bottled water and ultra-filtered nutrient-rich milk showed
growth.
Coke has said it is aiming for $3 billion in cost-cutting for
the year, and is redirecting savings into marketing like its "Share
a Coke" campaign.
Coke has already made moves to consolidate its global bottling
operations.
In August, three Coca-Cola Co. bottlers agreed to a merger
combining $12 billion in revenue across 13 European countries.
Publicly traded bottler Coca-Cola Enterprises Inc., or CCE, also
would relocate its headquarters to the U.K. from the U.S. in the
planned tie-up with Spain's privately held Coca-Cola Iberian
Partners SA and Germany's Coca-Cola Erfrischungsgetränke AG, the
latter owned by Atlanta-based Coke.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 24, 2015 08:25 ET (12:25 GMT)
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