All Remaining North American Territories Will Be Refranchised By End of 2017, Three Years Earlier Than Previously Expected
Plans Include the Sale of 39 Remaining North America Cold-Fill Production Facilities; Latest Agreements Include Letters of Intent for Territories in Five States
Company Announces Non-Binding Letter of Intent to Refranchise Company-Owned Bottling Operations in China
ATLANTA, Feb. 9, 2016 – The
The Company’s progress and success in transitioning bottling territories to date has provided the confidence to increase the pace of transition.
“We have made significant progress on our North American refranchising initiatives,” said Muhtar Kent, Chairman and CEO, The
Added Kent: “The acceleration of our global refranchising marks a step change in our efforts to refocus The
The franchise system is a cornerstone of the Company’s 21st Century Beverage Partnership Model in North America, a broad initiative aimed at building on system capabilities to sustain success. The first letters of intent in the refranchising process were announced in 2013.
“This has been an important, strategic process that positions the
Coca-Cola North America. “The North American market presents an opportunity to blend the strengths of a locally focused franchise bottling system with national production efficiencies and large customer account management.”
So far, the Company has reached definitive agreements or signed letters of intent to refranchise territories that account for more than 40% of bottler-delivered distribution volume in the United States. The Company’s
As part of this accelerated refranchising effort, the Company now plans to sell the remainder of its Company-owned cold-fill production facilities by the end of 2017. These facilities produce sparkling beverages, such as
Today, the Company announced several deals that represent additional progress in the overall North America refranchising process.
New letters of intent provide that:
- Coca-Cola Bottling Co. Consolidated, based in Charlotte, N.C., will assume additional territory in portions of Ohio and West Virginia, along with a production facility in Twinsburg, Ohio.
- Coca-Cola Bottling Company of Roseburg, based in Roseburg, Ore., will assume territory in the Pacific Northwest, primarily in southern Oregon and a small portion of northern California.
- ABARTA, Inc., based in Pittsburgh, will assume territory in Pennsylvania.
The letters of intent announced today are subject to the parties reaching definitive agreements. Financial terms are not being disclosed.
The Company has also closed its previously announced Definitive Agreement with Coca-Cola Bottling Co. Consolidated and successfully transitioned additional territory in Maryland and Virginia, along with a production facility in Sandston, Va.
Today, the Company is also announcing that it has entered into a non-binding letter of intent to refranchise Company-owned bottling operations in China to existing partners China Foods Limited, part of COFCO Limited, and Swire Beverage Holdings Limited.
Coca-Cola’s third-largest market by volume, China represents a significant long-term growth opportunity for The
Elsewhere, the Company is also focused on refranchising in markets such as Europe and Africa. This includes the planned creation of
History of North America Refranchising
North America is
A decade ago, The
In the five years since the deal was closed, The
The system also includes a new structure for production of finished beverages, with cold-fill production being owned by select, regional producing bottlers and hot-fill and syrup production remaining under ownership of
This press release may contain statements, estimates or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from The Company’s historical experience and our present expectations or projections. These risks include, but are not limited to, obesity concerns; water scarcity and poor quality; evolving consumer preferences; increased competition and capabilities in the marketplace; product safety and quality concerns; perceived negative health consequences of certain ingredients, such as non-nutritive sweeteners and biotechnology-derived substances, and of other substances present in our beverage products or packaging materials; increased demand for food products and decreased agricultural productivity; changes in the retail landscape or the loss of key retail or foodservice customers; an inability to expand operations in emerging and developing markets; fluctuations in foreign currency exchange rates; interest rate increases; an inability to maintain good relationships with our bottling partners; a deterioration in our bottling partners' financial condition; increases in income tax rates, changes in income tax laws or unfavorable resolution of tax matters; increased or new indirect taxes in the United States or in other major markets; increased cost, disruption of supply or shortage of energy or fuels; increased cost, disruption of supply or shortage of ingredients, other raw materials or packaging materials; changes in laws and regulations relating to beverage containers and packaging; significant additional labeling or warning requirements or limitations on the availability of our products; an inability to protect our information systems against service interruption, misappropriation of data or breaches of security; unfavorable general economic conditions in the United States; unfavorable economic and political conditions in international markets; litigation or legal proceedings; adverse weather conditions; climate change; damage to our brand image and corporate reputation from negative publicity, even if unwarranted, related to product safety or quality, human and workplace rights, obesity or other issues; changes in, or failure to comply with, the laws and regulations applicable to our products or our business operations; changes in accounting standards; an inability to achieve our overall long-term growth objectives; deterioration of global credit market conditions; default by or failure of one or more of our counterparty financial institutions; an inability to timely implement our previously announced actions to reinvigorate growth, or to realize the economic benefits we anticipate from these actions; failure to realize a significant portion of the anticipated benefits of our strategic relationships with Keurig Green Mountain, Inc. and Monster Beverage Corporation; an inability to renew collective bargaining agreements on satisfactory terms, or we or our bottling partners experience strikes, work stoppages or labor unrest; future impairment charges; multi-employer plan withdrawal liabilities in the future; an inability to successfully integrate and manage our Company-owned or -controlled bottling operations; an inability to successfully manage the possible negative consequences of our productivity initiatives; global or regional catastrophic events; and other risks discussed in our Company’s filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2014 and our subsequently filed Quarterly Reports on Form 10-Q, which filings are available from the SEC. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statements.