North America Refranchising Plan Remains on Track for Completion in 2017
ATLANTA, Oct. 26, 2016 – The Coca‑Cola Company continues to make strong progress toward completing its North America refranchising plan, with definitive agreements and closings involving nine different bottling partners reached during the third quarter and early fourth quarter of 2016.
The Company has completed four closings since it provided an update when second quarter earnings were announced July 27. The most recent closings all stem from expected transactions that were previously disclosed:
- Atlantic Coca‑Cola Bottling Co. of Atlantic, Iowa, closed on additional territory in Iowa, plus areas in Minnesota, Wisconsin, Illinois and Missouri, including six distribution centers in Iowa and one in Illinois.
- Great Lakes Coca‑Cola Distribution of Rosemont, Ill., closed on one distribution center in Wisconsin and two in Minnesota, plus production plants in Eagan, Minn., and Milwaukee.
- Swire Coca‑Cola, USA, a subsidiary of Swire Pacific Limited’s Beverages Division, closed on seven distribution centers in two states: Arizona and New Mexico.
- Viking Coca‑Cola Bottling Co. of St. Cloud, Minn., closed on facilities in Duluth, Minn., and Ashland, Wis., along with surrounding franchise territory in Minnesota, Wisconsin and Michigan.
Coca‑Cola also announced six definitive agreements, all signed during the third quarter or early fourth quarter. A definitive agreement, or DA, follows a letter of intent and is the final step prior to closing:
- Atlantic Coca‑Cola signed a DA that was later closed in the quarter. The territory involved is noted above.
- Coca‑Cola Beverages Florida, based in Tampa, signed a DA for additional territory in north and south Florida, including nine distribution centers and four production facilities in Jacksonville, Tampa, Orlando and Hollywood.
- Coca‑Cola Bottling Co. Consolidated, based in Charlotte, N.C., signed a DA for 14 distribution centers in five states: Illinois, Indiana, Ohio, Kentucky and West Virginia. Consolidated also signed a DA for three production plants in Cincinnati, Indianapolis and Portland, Ind.
- Coca‑Cola Bottling Company UNITED Inc., headquartered in Birmingham, Ala., signed a DA for a production facility in Montgomery, Ala. Coca‑Cola UNITED previously acquired distribution rights for the Montgomery market and surrounding territories in 2014.
- Coca‑Cola of Durango-Farmington, based in Durango, Colo., signed a DA for territory in Gallup, N.M.
- The Odom Corp., based in Bellevue, Wash., signed a DA for territory in Hawaii, including five distribution centers and a production plant in Honolulu. Odom is an expanding bottler with existing territory in Alaska.
In addition, three bottlers intend to join the Midwest Regional Product Supply Group, or Midwest RPSG. The Midwest RPSG is part of the National Product Supply Group, or NPSG, which was formed to administer key product supply activities for member bottlers in order to strengthen the U.S. Coca‑Cola production system.
The new members are:
- Atlantic Coca‑Cola;
- Coca‑Cola Bottling Company High Country of Rapid City, S.D.;
- Ozarks Coca‑Cola Bottling Company, based in Springfield, Mo.
Great Lakes Coca‑Cola Distribution is already a member of the Midwest RPSG, while Heartland Coca‑Cola Bottling Co. of Kansas City, a new bottler led by Ulysses “Junior” Bridgeman, will become a member next year.
These agreements are part of a plan to refranchise all of The Coca‑Cola Company’s North American 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 with 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.
So far, the Company has reached definitive agreements or signed letters of intent to refranchise 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.
The Coca‑Cola Company (NYSE: KO) is the world's largest beverage company, refreshing consumers with more than 500 sparkling and still brands and more than 3,800 beverage choices. Led by Coca‑Cola, one of the world's most valuable and recognizable brands, our company’s portfolio features 20 billion-dollar brands, 18 of which are available in reduced-, low- or no-calorie options. Our billion-dollar brands include Diet Coke, Coca‑Cola Zero, Fanta, Sprite, Dasani, vitaminwater, Powerade, Minute Maid, Simply, Del Valle, Georgia and Gold Peak. Through the world's largest beverage distribution system, we are the No. 1 provider of both sparkling and still beverages. More than 1.9 billion servings of our beverages are enjoyed by consumers in more than 200 countries each day. With an enduring commitment to building sustainable communities, our company is focused on initiatives that reduce our environmental footprint, 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 www.coca-colacompany.com, follow us on Twitter at www.twitter.com/CocaColaCo or find us on LinkedIn at www.linkedin.com/company/the-coca-cola-company.