COCA-COLA ENTERPRISES: ‘09 outlook targets packaging, more

Coca-Cola Enterprises is expected to outline next week the results of a business review designed to make the company more profitable and efficient.

Atlanta-based CCE, Coca-Cola Co.’s largest bottler, has scheduled a Dec. 18 conference call with analysts to discuss the review and provide its outlook for 2009.

CCE, which handles about 80 percent of Coke’s North America bottle and can volume, announced the review in July on the same day it lowered its earnings expectations for the year. A slowing U.S. economy and rising costs for commodities such as aluminum, plastic and sweeteners had affected the company.

Since the announcement, commodity prices have fallen. CCE also has announced cost-cutting measures. It has eliminated 1,000 jobs, or about 2 percent of its North American work force, and consolidated U.S. business units from six regions to four.

Analysts and industry experts have honed in on two other areas that need to be addressed: Supply chain and packaging.

CCE’s supply chain —- the way it gathers, makes and distributes products —- has been complicated by the rise in new, noncarbonated beverages, such as teas, juice drinks and enhanced waters.

CCE makes soft drinks at its own plants, but many of the noncarbonated beverages are made at outside plants. This can cut into CCE profits and make it more difficult to coordinate distribution.

The package mix for soft drinks also has become weighted to 12-packs, 2-liter bottles and 20-ounce bottles.

Industry experts, including executives in both the Coca-Cola and Pepsi systems, have said new packages must be introduced to give consumers more options and help bottlers improve profits.

CCE and other bottlers have started testing different packages, such as 8-packs, 1-liter bottles and 16-ounce bottles.

Coke and CCE also are working on ways to improve their supply chain, according to industry reports.

Coke, Pepsi and their bottling partners are trying to find ways to deal with significant changes in the industry, said John Sicher, Beverage Digest editor and publisher.

“Clearly, both Coke and Pepsi are taking a fresh look at their relationships with their bottlers and even relationships among their bottlers,” Sicher said.

Beverage Digest in November reported that Coke and CCE are in talks about forming a new supply chain company for North America.

It’s unclear how much could be worked out by next week’s conference call, Sicher said.

Also in a November, Morgan Stanley analyst Bill Pecoriello predicted Coke and CCE would form a supply chain company and reach agreement on a three-year strategic plan. He wrote in the report that an announcement was likely in late December or early January.