The FINANCIAL — The Coca-Cola Company and its bottling partners took several key steps in the ongoing North American refranchising process to start 2017, including the creation of two new, independent bottlers.
The transactions in North America completed since the last refranchising update on Feb. 9 represent the largest block of territory transitions to date:
A new bottler, Heartland Coca-Cola Bottling Co., based in Kansas City, Mo., began operations in parts of Missouri, Kansas, Illinois and Nebraska, including the cities of St. Louis, Kansas City, Topeka, Kan., Wichita, Kan., and Springfield, Ill. Heartland Coca-Cola also acquired a production facility in Lenexa, Kan. This new bottler is led by Ulysses “Junior” Bridgeman, a former NBA player and a successful business owner.
A new bottler, Coca-Cola Southwest Beverages, based in Dallas, began operations in Texas and parts of New Mexico, Oklahoma and Arkansas. The bottler also acquired nine production facilities in Texas. Coca-Cola Southwest Beverages is part of AC Bebidas, a subsidiary of Arca Continental of Monterrey, Mexico, one of the largest Coca-Cola bottlers in the world. The Coca-Cola Company currently holds an equity stake in AC Bebidas.
Coca-Cola Bottling Co. Consolidated of Charlotte, N.C., closed on additional territory in Indiana and Ohio, including the cities of Indianapolis and Columbus, Ohio, plus production facilities in Indianapolis and Portland, Ind.
Swire Coca-Cola, USA, closed on additional territory in Washington and northern Idaho, including the cities of Seattle and Spokane, Wash., along with a production facility in Bellevue, Wash.
Coca-Cola Beverages Florida, based in Tampa, closed on additional territory in South Florida, including the markets of Miami, Fort Lauderdale, South Dade, West Palm Beach and Big Pine Key. Coca-Cola Beverages Florida also acquired production facilities in Tampa and Hollywood, Fla.
Coca-Cola also announced the signing of the following definitive agreements, or DAs. A DA is the final step before closing:
Coca-Cola Bottling Company UNITED of Birmingham, Ala., reached a definitive agreement for additional territory in Georgia, including Atlanta, Athens, Dublin, Gainesville, Jasper, Lawrenceville, Macon and Rome, along with production facilities in Marietta and College Park, Ga.
Coca-Cola Bottling Co. Consolidated reached a definitive agreement for territory in parts of northern Ohio, including a production facility in Twinsburg, Ohio.
Timber Country Coca-Cola Beverages of Roseburg, Ore., reached a definitive agreement for additional territory in southern Oregon and northern California.
Finally, Middlesboro Coca-Cola Bottling of Kentucky reached a letter of intent for additional territory in Somerset, Ky. Previously, this territory had transitioned to Coca-Cola Bottling Co. Consolidated.
21st Century Beverage Partnership Model History
These agreements are part of a plan to refranchise all of The Coca-Cola Company’s U.S. bottling territories by the end of 2017.
The Coca-Cola Company 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, which led to the establishment of Coca-Cola Refreshments.
Since the closing of the transaction involving the North American territories of Coca-Cola Enterprises, The Coca-Cola Company 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, 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, according to the Coca-Cola Company.
So far, the Company has reached definitive agreements or signed letters of intent to refranchise bottling territories that account for approximately 65% of total U.S. bottler-delivered distribution volume, which equates to 71% of total Coca-Cola Refreshments volume. The Company has also reached definitive agreements or signed letters of intent for 44 of the 51 cold-fill production facilities in the United States.
The Coca-Cola Company and the parties involved are committed to working together to implement a smooth transition with minimal disruption for customers, consumers and system associates. Financial terms are not being disclosed.