An agreement to bring Coca-Cola Co. profit margins in line with its largest US bottlers’ is near, according to reports. The Wall Street Journal has today reported that the drinks manufacturer is close to sealing a deal with Coca-Cola Enterprises Inc. (CCE) regarding its concentrate pricing.
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The current agreement between Coke and its bottlers has been that the drinks manufacturer sells its concentrate to US bottlers at an agreed price, regardless of how the bottlers package the beverage. Consequently, Coke’s profits are dictated by volume growth while bottlers can improve their margins depending on a particular package or where the drinks are sold.
Much of the drinks industry’s innovation, the newspaper says, is based primarily on smaller bottles and cans, thereby providing higher profit margins for bottlers but less volume and revenue for Coke.
According to the report, John Alm, president and chief operating officer of CCE, said a new pricing system could be finalised early next year which would align the two companies.
CCE sells around 80% of Coke’s volume in North America.
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