The Coca-Cola Company Commences Implementation of 21st Century Beverage Partnership Model in the United States
Next Steps Include Strengthening U.S. Operating Model Through
Territories Granted To Five U.S. Bottling Partners Coca-Cola Consolidated, Coca-Cola United, Swire Coca-Cola USA,
Coca-Cola High Country and Corinth Coca-Cola Working Closely With The
Coca-Cola Company to Evolve Operating Model
The Coca-Cola Company today announced that it has taken a significant
step toward its 2020 Vision by commencing implementation of a 21st
century beverage partnership model in the United States.
Under the new model, The Coca-Cola Company and five U.S. bottlers have
agreed in principle to take the next step in creating a stronger U.S.
business model through the granting of new, expanded territories. The
five bottlers are Coca-Cola Bottling Co. Consolidated, Coca-Cola
Bottling Company United Inc., Swire Coca-Cola USA, Coca-Cola Bottling
Company High Country and Corinth Coca-Cola Bottling Works Inc. As the
model continues to evolve, the Company anticipates pursuing additional
steps with these bottlers in the future.
“A strong franchise system has always been the competitive advantage of
the Coca-Cola business globally, and today we are accelerating the
transformation of our U.S. system in ways that will establish a clear
path to achieve our 2020 Vision,” said Muhtar Kent, Chairman and Chief
Executive Officer, The Coca-Cola Company. “What began with the
acquisition of Coca-Cola Enterprises’ North American operations in
October 2010 continues with the steps we are announcing today. These
actions are being taken ahead of our previously stated timeline. The
result will be further progress toward a more agile, modern,
customer-focused franchise business partnership model unique to the
United States.”
In the newly granted territories, The Coca-Cola Company and these
bottlers will work collaboratively to implement key elements of this
evolving U.S. operating model, including:
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More rational and contiguous operating territories;
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A grant of exclusive territory rights and the sale by Coca-Cola
Refreshments of distribution assets and cold drink equipment;
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A finished goods model under which production assets will remain with
Coca-Cola Refreshments, which would facilitate future implementation
of a national product supply system;
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An improved, more integrated information technology platform;
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A new beverage agreement that supports the evolving operating
model.
“We believe that unique competitive advantage lies in a U.S. system that
can act with the speed of an integrated, lower cost national business
enabled by deep local knowledge, community connections and the
outstanding commercial capabilities of a strong local bottling system,”
said Steve Cahillane, President, Coca-Cola Americas. “This new
architecture that we are beginning to implement ensures a meaningful
role for current and future aligned bottling partners in the U.S.”
Depending on the situation, transactions might include an outright
territory sale, a territory swap, or a sub-bottling arrangement (under
which the bottler would make ongoing payments in exchange for exclusive
territory operating rights). Financial terms were not disclosed.
These new territories will include some of the largest cities in the
geographies that border these bottlers’ existing territories, allowing
each bottler to better service local customers and provide more
efficient execution.
New territories:
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Coca-Cola Consolidated will assume territories in Tennessee, including
the Knoxville market, and Kentucky, including the Louisville and
Lexington markets;
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Coca-Cola United will assume territories in Alabama including the
Montgomery market, and portions of northwest Florida, north and west
Georgia and southeast Tennessee;
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Swire Coca-Cola will assume territories in the Denver and Colorado
Springs, Colo., markets;
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Coca-Cola High Country will assume territories in the Sheridan, Wyo.,
and Billings, Mont., markets;
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Corinth Coca-Cola will assume territories in the Jackson and Paris,
Tenn., markets to expand its presence in west Tennessee.
The transactions announced today are subject to the parties reaching
definitive agreements by the end of 2013, with closings expected during
2014. 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, the world's most valuable brand, our Company's
portfolio features 16 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 1.8 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
or check out our blog, Coca-Cola Unbottled, at www.coca-colablog.com.