LONDON – The merger creating the world’s largest independent Coca-Cola bottler officially closed over the weekend, combining the operations of Coca-Cola Enterprises (CCE), Coca-Cola Iberian Partners (CCIP) and Coca-Cola Erfrischungsgetränke GmbH (CCEG).
Coca-Cola European Partners will serve more than 300 million consumers across 13 countries in Western Europe, including the region’s four largest markets for nonalcoholic ready-to-drink (NARTD) beverages: Germany, Spain, Great Britain and France. The landmark deal combines the complementary strengths and local relationships of the three partner bottlers, positioning the Coca-Cola system to compete more effectively across multiple beverage categories through a world-class production, sales and distribution platform.
The London-headquartered company, which will be publicly traded starting this week on the Euronext Amsterdam, Euronext London, the New York Stock Exchange and Spanish Stock Exchange, will employ approximately 25,000 people.
We spoke with Sol Daurella, chairman of Coca-Cola European Partners, last week to learn more about the new consolidated bottler and the impact it will have not only on the Coca-Cola system, but on retail customers and consumers across Western Europe. A third-generation Coca-Cola bottler, Ms. Daurella is chairman of Coca-Cola Iberian Partners, the largest shareowner in Coca-Cola European Partners.
The deal to create Coca-Cola European Partners has successfully completed. How are you and the team feeling?
We’re extremely excited about this merger, which we see as a growth opportunity for the Coca-Cola system. The (NARTD beverages) category in Western Europe is large, vibrant and growing. As a new company, we will start with only a 29 percent market share in value across the region, so we see a lot of headroom. We will have a 4,000-strong sales force that will make more than 12 million customer visits every year. So we see this as a great platform to capture growth through our local connections. And our increased scale will drive efficiencies we can reinvest back into the business.
In 2013, you led the integration of eight Coca-Cola bottlers in Spain and Portugal to form Coca-Cola Iberian Partners. What learnings will you bring to Coca-Cola European Partners?
I was fortunate to oversee that merger, which not only drove efficiencies but returned the Iberian Coca-Cola system to growth. And our success these last few years gives us confidence we can drive the same results across Western Europe. The integration in Spain and Portugal was different because there was much more significant overlap and overinvestment. In the case of CCEP it’s more about the opportunity of scale. But we certainly have many valuable learnings we can translate and export. For example, our integration general manager for Coca-Cola Iberian Partners will serve as chief integration officer for Coca-Cola European Partners. From a governance and strategic point of view, we’re prepared to hit the ground running. Once plans for the merger were announced in August 2015, we set up an integration steering committee led by James Quincey, Irial Finan, John Brock and me. We’ve met 13 times over the last 280 days to get ready for the first day of the new business. We also set up an integration management office with more than 100 people. My key learning these last few years is that you have to be inclusive. You need everyone to engage with the new organization and the plans you want to put in place. It’s important to have a merger of equals like the one we have here.
Your grandfather became a bottler in Spain back in 1951. Is Coca-Cola in your blood?
Indeed. We bring more than 60 years of Coca-Cola experience to this business. We were brought up with a passion for Coca-Cola… we’ve never known anything else. I inherited that passion from my father, who inherited it from his father.
What complementary strengths do the three partner bottlers bring to the table?
For example, the German bottler (CCEG) is way ahead when it comes to working with hard discounters. In Spain, we’re great at working with smaller customers through feet on the street and in our commercial approach. And CCE is very good at supply chain management. We’re ready to build on these best practices, serve the market and serve our customers together – the people who sell Coke directly and those who help sell Coke – from day one.
Why is now the time for such a significant bottling consolidation effort in Europe?
This is a very different world, and a very different Europe today. Over time, the Coca-Cola system has developed a powerful network of small bottlers in Europe, and this worked well for many years. Germany had over 100 bottlers at one time, and Spain had 20. When my family was granted a Coca-Cola bottling franchise in 1951, our territory was between the two rivers in Barcelona. And we only sold returnable glass bottles. Since then, the system has modernized both in terms of production and distribution, and the scale of our customers has expanded significantly. Before, we only had small mom-and-pop customers. Our structure is still very capable of serving small customers at the local level, but now we have large customers we have to serve across Europe. Consumer trends are pan-European now, too. We see a great opportunity through this merger to serve customers more effectively – and by channel as well as by geography.
How will this bottler fuel innovation in such a critical territory for the Coke business?
The Coca-Cola Company has done a very good job of innovating across new products, new sweeteners, new equipment and new packaging. We have many local gems driven by local bottlers. By bringing together three bottlers to serve such a large territory, we hope to speed up the roll out of innovation.
From an operations standpoint, how will this structure drive efficiency and cost savings?
We are projecting between 315 and 340 million euros in synergies and cost efficiencies. We’ve already seen the first good examples of how we can standardize best practices in supply chain and procurement such as light-weighting our 1.5ltr PET bottles and improving our execution of in-store merchandising by building smaller product pallets.
Muhtar Kent (left), chairman and CEO, The Coca-Cola Company; Sol Daurella, chairman, Coca-Cola European Partners; and John Brock, CEO, Coca-Cola European Partners.
We’ve talked a lot about how this will benefit customers. Looking a bit further downstream, what can the Coca-Cola consumer in Europe expect?
For starters, we’ll be scaling products across Europe faster and more effectively than we were able to do as three separate bottlers. So the consumer in Europe will benefit from a much greater availability of a wider range of leading brands from The Coca-Cola Company, including more choices of beverages with or without sugar.
What are your initial priorities over the first six months?
As I said, we’re prepared to hit the ground running on day one. Our first priority is to minimize disruption when it comes to day-to-day operation. There are obviously many IT and financial systems powering an integration of this scope behind the scenes. Many people who help sell Coke and support our front-line heroes need functions and tools to help them do their day-to-day jobs. So our first objective is to continue business as usual and ensure a seamless transition for our customers and consumers. Looking ahead, we have very robust plans in place for the next six months. Thanks to our experience over the last few years, we’re prepared. We’ll be engaging teams across the organization – from all functions and all countries – and creating a network of teams to drive efficiency and share best practices to fuel reinvestment and, ultimately, the growth we know we can capture. We’re beginning what we know will be an exciting chapter for the Coca-Cola system.
Learn more about Coca-Cola European Partners at www.ccep.com.