The FINANCIAL — The Coca-Cola Company on December 9 announced that it has signed Letters Of Intent (LOI) with three U.S. bottlers to grant expanded distribution territories in five states as it continues to accelerate the pace of territory refranchising.
In each territory, The Coca-Cola Company will grant exclusive rights to these bottlers for the sale and distribution of bottler-delivered Coca-Cola beverages. In addition, Coca-Cola Refreshments (CCR), the Company-owned U.S. bottler, will sell its sales and distribution assets to the expanding local bottling partner. New letters of intent provide that:
Coca-Cola Beverages Florida, based in Tampa, will assume additional territory in southeastern Florida including Ft. Lauderdale, Hollywood, Miami and West Palm Beach.
Coca-Cola Bottling Company UNITED, based in Birmingham, Ala, will assume additional territories in north and central Georgia including Atlanta and the Metro Atlanta area, Athens, Macon and Rome. Additionally, as part of the National Product Supply System, UNITED will acquire production facilities in College Park and Marietta, Ga, Montgomery, Ala. and Cleveland, Tenn.
Viking Coca-Cola Bottling Company, based in St. Cloud, Minn., will assume territory in portions of northern Minnesota including Duluth and northern Wisconsin including Ashland, and a portion of Michigan.
Consistent with previous transactions, The Coca-Cola Company and these bottlers will work collaboratively to benefit from more rational and contiguous operating territories across the United States; an improved, more integrated information technology platform across bottlers; and a new beverage agreement that supports the Coca-Cola system’s evolving U.S. operating model, according to Coca-Cola.
“Together with our bottling partners, we are changing the landscape of our U.S. system,” said Sandy Douglas, president, Coca-Cola North America. “Today’s announcement further advances our efforts to balance national scale and local capability, which will help us significantly increase our leadership and enhance our competitive advantage in the U.S. business.”
The Coca-Cola Company has also reached Definitive Agreements on LOIs announced early in 2015 for the following distribution territories:
Clark Beverage Group will assume additional markets in Mississippi.
Chesterman Company will assume new territory in Nebraska and western Iowa, including the Omaha and Lincoln markets.
In total, and including the letters of intent announced today, territories transitioned to-date or included in agreements represent almost 40% of total U.S. bottle-delivered distribution volume.
The letters of intent 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. Financial terms were not disclosed.
Separately, The Coca-Cola Company has also reached Definitive Agreements on LOIs announced in September of 2015 with three National Product Supply (NPSS) bottlers for the sale of the following production facilities:
Coca-Cola Bottling Co. Consolidated will acquire production facilities in Sandston, Va., and Baltimore and Silver Spring, Md.
Coca-Cola Bottling Company UNITED will acquire the production and distribution facility in New Orleans, La.
Swire Coca-Cola USA will acquire production facilities in Phoenix, Ariz. and Denver, Colo.
The transition of these production facilities from CCR to NPSS bottlers is anticipated to take place between 2016 and 2018. The Coca-Cola Company and Coca-Cola Bottling Co. Consolidated continue to work towards Definitive Agreements on remaining production facilities previously announced.
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