Blog: Coca-Cola, CCE ties strained
Olly Wehring | 24 October 2008
Relations between The Coca-Cola Company and one if its principal bottlers, Coca-Cola Enterprises, are understood to be under strain.
Coca-Cola Enterprises yesterday (23 October) slashed profit guidance for 2008, following a fall in earnings in Q3 and a warning of tough market conditions in the US.
Amongst the gloom, however, was a note stating that Coca-Cola had pulled $35m of funding from CCE this year.
Separately, CCE announced that Gary Fayard, Coca-Cola CFO, would quit his post on the bottler's board. This, just-drinks was informed, was in order for Fayard to concentrate on his job at Coca-Cola.
Analyst group Stifel Nicolaus said in a note yesterday evening that the two groups had a "long and troubled history". It said CCE's announcements "reduce our confidence that Coke will work constructively with CCE as an important but separate partner".
It also suggested that Fayard's departure may prove a "useful prerequisite" to a change in Coca-Cola's ownership of CCE.
With the fourth quarter looking tough for the North American soft drinks market, and talk of a recession lasting 18 months, division in the ranks is not likely to help either group.
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