Coca-Cola's bottler deal: "This is not a victory lap."

Now comes the hard part.

After taking over the U.S. and Canadian factories and employees of bottler Coca-Cola Enterprises in a $12.3 billion deal that closed this weekend, Coca-Cola intends to redesign the ways it gets drinks into American hands. It's a big job, and Coke executives don't have time to celebrate after completing the company's biggest buyout ever.

"Now we can get to work and do what we're so excited about doing," chief executive Muhtar Kent said in a Sunday interview. "This is not a victory lap. We're far away from any victory lap."

In taking responsibility for a blue-collar business it generally was content to avoid for decades, Coca-Cola will have to manage morale in a time of uncertainty, shuffle and trim a North American workforce of about 70,000, and straighten out a tangled distribution system.

"Coke is about to assume the heavy lifting," said Tom Pirko, president of California consulting firm Bevmark. "The consumer has forced and compelled Coke to move away from the model that has guided it for decades."

Over the coming months, large shifts will happen inside Coca-Cola, which has formed sales and bottling groups called Coca-Cola Refreshments USA and Coca-Cola Refreshments Canada to work with a marketing organization called Coca-Cola North America. The company's North American workforce is suddenly larger, counting almost 59,000 former CCE employees in North America.

With months of integration meetings in hand, Coca-Cola laid a lot of the foundation for the new organization, said Gerry Khermouch, editor of Beverage Business Insights. "[But] this is something that's happening on a massive scale. There's always execution risk."

Coca-Cola said most people who make up the current North America teams at Coca-Cola and CCE will see minimal change in their roles and responsibilities. However, some employees will report to new bosses, be responsible for new jobs or see their jobs eliminated.

"There's going to be some shifting in jobs; there will be some changes," Kent said. Yet from the company's experience in owning a bottler in Philadelphia, he added, "We know there's also a tremendous amount of need for people that we need to deploy at the point of impact. We're going to figure this out."

Among the first things to change will be the company's supply chain, said Michael Bellas, CEO of New York-based Beverage Marketing Corp. Coca-Cola will close redundant plants and combine some plants making soft drinks and juice, he predicted.

Coca-Cola also will have to manage its relationships with a network of about 70 smaller U.S. bottlers. Coke's independent bottlers account for about 23 percent of its bottle and can soft drink volume in the U.S., according to Beverage Digest.

Coca-Cola and PepsiCo together spent about $20 billion this year to buy their biggest North American bottlers. John Sicher, Beverage Digest editor, said there will need to be some changes in the big companies' relationships with the other bottlers. Some areas that might need to be adjusted include supply chain, production, handling national accounts and coordination in general. "This will be one challenge for both Coke and Pepsi," Sicher said.

Since the earliest days of Coca-Cola, the company has run its own soda fountain business. Since Asa Candler signed over bottling rights to two young Chattanooga lawyers in 1899, bottles (and later cans) of Coca-Cola, Diet Coke, Sprite and other soft drinks generally have been produced by a network of independent bottlers -- more than 1,000 of them at one point, and about 300 today.

The blue-collar world that the bottlers inhabit is not completely foreign to Coca-Cola. It owns a bottler in Philadelphia, and others in Germany, India and the Philippines. From the beginning, it has run its soda fountain business in the U.S.

Coca-Cola's business model largely is based on churning out concentrate at a handful of plants at secret locations around the world and selling it to bottlers, who turn it into soft drinks in bottles and cans. For years, it was a formula for massive profits for Coca-Cola, which focused heavily on marketing and had envy-inducing stock price multiples to show for it. The system was built for high-volume brands such as Coca-Cola and Diet Coke, and it worked well for a long time.

Yet as consumers' tastes changed and started encompassing a wide variety of beverages -- from sports drinks to juices to coconut water -- Coca-Cola's beverage distribution network got more complicated in North America. Coca-Cola had separate operations for its soda fountain business and its Minute Maid and Odwalla juices, running alongside CCE's bottling operations.

In some stores, a squadron of a half-dozen or more people from CCE and various divisions of Coca-Cola might come in to sell and stock their designated beverages. Nowhere else in the world is the system set up like that, Kent said.

"There were complications, there were duplications, there was time lost, there was red tape," he said Sunday.

Now, if all goes according to plan, U.S. consumers will see more niche beverages and selections tailored to individual stores as Coca-Cola pursues tighter relationships with national retail chains. Kent said he wants fewer out-of-stock beverages and a fuller portfolio of drinks.

"[Retailers] will notice the responsiveness, the speed, better execution," Kent said. "Consumers will see it in terms of the execution in the aisle."

Now that Coca-Cola owns most of its U.S. bottling system, it can decide for itself on investing in new packaging, Sicher said. Consumers might see a greater variety of packaging than they have in the past. Previously, adding new brands and packages or changing a distribution route could set off rounds of negotiations with CCE, a process that slowed Coca-Cola.

With Coca-Cola in the driver's seat, "They don't have to get into a pitched battle when they decide whether to take a new brand into one channel or another," Khermouch said.

Morningstar analyst Phil Gorham said the migration of consumers from soft drinks to non-carbonated drinks is still happening. "We don't know which of these will fail or become mainstream," he said of the emergence of new brands. Coke has to keep all of its options open and use its new control over bottling to experiment. "It's all about being nimble," he said.

Pirko said it will be difficult for Coca-Cola to remake its bottling operations while managing both niche beverages and billion-dollar brands. "They are now responsible for all this other stuff, and that's never been their province," said Pirko. "They have to become a new kind of company."

MEET THE REPORTER: Jeremiah McWilliams came to The Atlanta Journal-Constitution in December 2009 to cover the beverage and restaurant industries. A native of Virginia, he previously covered manufacturing and the auto industry at The Virginian-Pilot in Norfolk, Va., where he reported on the closure of Ford Motor Co.'s local factory. He also covered the beer industry for the St. Louis Post-Dispatch, and led the paper's coverage when Belgian brewer InBev bought Anheuser-Busch two years ago. He graduated from Washington and Lee University in Lexington, Va. with degrees in journalism and management.

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