Coke, which made the announcement following news of better-than-expected first quarter profits for the company, agreed in principle to grant expanded distribution territories to 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. Coke noted that it anticipates additional deals with the bottlers in the future.
Although Coke had in 2010 purchased the North American operations of its largest bottler, Coca-Cola Enterprises Inc., in an effort to cut costs and streamline business operations, the company had planned to gradually return bottling and distribution franchise rights to independent bottlers of its drinks.
“A strong franchise system has always been the competitive advantage of the Coca-Cola business globally,” Kent said. ““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 its statement about the new distribution agreements, Coke stated that the financial details of the deals would vary “depending on the situation” and may 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.
