Coca-Cola Co.’s year-long restructuring plan continued Thursday when the company announced it will sell nine of its bottling facilities valued at around $380 million.
The Atlanta beverage giant will sell plants across several states — including Virginia, Maryland, Arizona and Colorado — to independent bottlers, Coca-Cola Bottling Co. Consolidated, Coca-Cola Bottling Company United, and Swire Coca-Cola USA.
The new group will represents approximately 95 percent of the U.S. produced volume, Coke said.
At the same time, the bottlers, Coke and its bottling arm — Coca-Cola Refreshments — will create a new system dubbed National Product Supply System to streamline production in the United States.
“We will leverage the strengths and capabilities of the four largest producing bottlers in our U.S. system, CCR, Consolidated, United and Swire to operate as one highly aligned and highly competitive national product supply system,” Coca-Cola CEO Muhtar Kent said in a release.
The announcement comes five years after Coke bought Atlanta-based Coca-Cola Enterprises’ North American operations for $12 billion. CCE now is in the process of merging into a Europe-based bottling network.
Edward Jones analyst Jack Russo told Bloomberg News that Coke’s move now to put U.S. production back in the hands of independent bottlers isn’t surprising.
“The thought there was to bring the underperforming bottlers under their wings so they could improve performance of the bottlers and the entire Coca-Cola network,” Russo told Bloomberg. “They did tell us that once the bottlers were nursed back to health, they would sell them off.”
Wells Fargo analyst Bonnie Herzog praised the move, saying it will help Coke get its products to consumers quicker while also creating a bottling system that can operate in unison and act efficiently.
“(Coca-Cola) management noted in today’s announcement that the NPSS will leverage its national scale to drive lower costs across the system and increased speed to market,” Herzog wrote in notes.
Coke is moving quickly to improve its infrastructure as part of a plan to cut costs in the face of struggling sales in its carbonated drinks, the company’s bread and butter.
In addition to cutting costs, which have included layoffs, the company has increased the share of profitable 7.5 ounce-cans on store shelves.
