Coca-Cola to sell nine US production facilities to independent bottlers
25 September 2015
Coca-Cola Co yesterday said it planned to sell nine production facilities to three of its largest independent bottlers as it looked to unload low-margin assets and cut costs of manufacturing in the US.
The bottlers, Coca-Cola Bottling Co Consolidated, Coca-Cola Bottling Co United and Swire Coca-Cola USA, would acquire the nine plants worth around $380 million, from Coca-Cola Refreshments, which was created by Coke after buying its top bottler in North America in 2010.
Furthermore, Coke said North America, would form a new supply group to work together on decisions in areas such new packaging launches and ingredient purchases. The new group would represent around 95 per cent of the company's production volume in the US.
The world's largest soda maker is facing sluggish sales volumes in the US and had been selling bottling operations to shift away from the capital intensive and low-margin business of distribution.
Until now, however, it had not sold production facilities, where its concentrate was combined with other ingredients and bottled up.
The sale of the plants, was expected to take place between 2016 and 2018, according to Coca-Cola said.
The move forms part of the new National Product Supply System (''NPSS'') in the US aimed at facilitating optimal operation of the US product supply system for Coca-Cola bottlers in order to:
- Achieve the lowest optimal manufactured and delivered cost for all bottlers in the Coca-Cola system
- Enable system investment to build sustainable capability and competitive advantage
- Prioritize quality, service and innovation in order to successfully meet and exceed customer and consumer requirements
Under the new NPSS, the three existing independent producing bottlers, as well as the Company-owned Coca-Cola Refreshments along with Coca-Cola North America, will be members of Coca-Cola's National Product Supply Group.
The NPSG will administer key national product supply activities for these NPSS bottlers, which currently represent approximately 95 per cent of the US produced volume.
''Our US operating model continues to become stronger, more aligned and more competitive. Today we are taking further action to enable profitable growth for our entire US system,'' said Muhtar Kent, chairman and CEO, The Coca-Cola Company.
''We will leverage the strengths and capabilities of the four largest producing bottlers in our US system, CCR, Consolidated, United and Swire to operate as one highly aligned and highly competitive national product supply system.''