The Coca-Cola Company (NYSE:KO) To Franchise Bottling In U.S By 2020.


Dallas, Texas 02/27/2014 (FINANCIALSTRENDS) – The Coca-Cola Company (NYSE:KO) reported earnings for its fourth quarter and FY13 operations earlier this month which were well below the analyst estimate, while its net revenue receipts for the quarter was down 4 percent in comparison to 4Q12. The dip in revenue was offset by across the board 2 percent increase in volumes in comparison to FY12 and by 5 percent in 4Q13 primarily driven by additional demand for “sports drinks, bottled water, ready-to-drink tea and juice drinks”.

Outsourcing Bottling Activities

It is in this backdrop of increased volumes and decreasing profits, that one needs to analyze The Coca-Cola Company (NYSE:KO) announcement earlier this month that it had tied up with new bottling partners to cover the Chicago and Florida geographies. This move is also being seen as a full reversal of its 2010 decision to dispense with third party bottling partners and bring in the services in house.  The financial terms of the agreement were not made public. The agreements signed are of preliminary nature and is expected to be upgraded to a full fledged agreement by end of this fiscal year.

Redrawing Its Go To Market Plan – Investing More In Marketing

The move by The Coca-Cola Company (NYSE:KO) received wide spread coverage, as its Chief Executive Officer Muhtar Kent broached the topic in full detail during his presentation to the “Consumer Analyst Group of New York” which was held in Florida on 21st February. He is quoted to have said that, “The plan is to have the majority of North American territory franchised before we reach 2020.”  The plans of moving more of its bottling requirements out of the company is also coupled with increasing funding to its marketing and sales efforts to the tune of $400 million to help turn around its slowing down sales.

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