Coca-Cola wants to streamline its supply operations

Coca-Cola wants to streamline its supply operations

The Coca-Cola Co's US bottler restructuring will create a “coast-to-coast” system managed from one point, company CEO Muhtar Kent has said.

Kent told analysts in a conference call today (16 April) he wants “a more agile, modern customer-focused franchised model unique to the US”. But he refused to comment on whether other US bottlers will join the five that have giving tentative approval to the plan or what shape the final agreement will take.

“It is a continuous evolution,” Kent said, adding that “it will take as long as is necessary” for an agreement to be implemented.

Under the plan, the five independent bottlers - Coca-Cola Bottling Co Consolidated, Coca-Cola Bottling Co United, Swire Coca-Cola USA, Coca-Cola Bottling Co High Country and Corinth Coca-Cola Bottling Works - have the option to take distribution territory from Coca-Cola.

Stifel analyst Mark Swartzberg called it “a major step in the transformation of (Coca-Cola's) US production and distribution”.

If implemented, it will be the latest change to Coca-Cola's extensive global supply network. In December, four Tokyo bottlers said they were to join forces, while in January Coca-Cola FEMSA, one of Coca-Cola's biggest independent bottlers, secured a majority stake in Coca-Cola Bottlers Philippines.

Kent denied the US restructuring would be a template for other regions. “There is not one model for the world,” he said. “It is all part of our plan that we can continue to deliver on our vision.”

Coca-Cola posted a disappointing set of first-quarter results today as sales and profits fell. Operating profits in North America dropped by 24%, however Kent told investors: “We remain confident we have the right strategy for North America despite the challenging environment.”