In an attempt to revamp its franchising efforts in North American market, The Coca-Cola Co (NYSE:KO) signed a letter of intent to grant a handful of bottling territories to its US franchise Swire Coca-Cola. As part of this initiative, Swire has been given areas like Idaho, Washington and Oregon. To run operations efficiently, Swire will also acquire cold-fill production facilities in all the areas mentioned above.
It’s not the first time when a decision like this has been taken. Last year, Swire announced that it would take over territories in key areas like Colorado and Arizona.
Insights of Matter
Swire Coca-Cola is but a subsidiary of the company within the beverage division of Swire Pacific. It markets, manufactures and distributes a broad range of Coca-Cola products in different markets, including Taiwan, Hong Kong, China and Western part of United States. Other than this decision, Coca-Cola Co. also got in touch with its Rosemont-based Reyes Holding company, Great Lakes Coca-Cola Distribution LLC, to discuss the approach towards taking over facilities in Minnesota, Wisconsin, Michigan, Illinois and Iowa. Both of them had signed LOI in 2015 to carry out these transactions, but things got delayed until now.
Coca-Cola looks forward to creating a more centralized and efficient system; all these refranchising attempts are being taken to forge ahead in that direction. In a recent public statement, it announced that it would finish refranchising of remaining North American bottling operations latest by 2017, much ahead of expected deadline of 2020. In order to achieve this milestone in a hassle-free manner, it plans to sell all those 39 North American cold-fill production facilities that produce sparkling and still beverages.
Going forward, it will retain the holding rights of hot-fill facilities, ensuring that its supply to North America Coca-Cola system remains intact. Coca-Cola has many more plans to monetize and improve franchise system around the world, details of which will be announced in the near future.