Published September 2016
Latest news on The Coca-Cola System of the Future:
- In May, The Coca-Cola Company announced a letter of intent with Arca Continental, along with Coca-Cola Bottling Company UNITED, to create a joint venture involving these territories. Currently, the area is operated by the Coca-Cola Refreshments unit of The Coca-Cola Company. During due diligence and transition planning, the companies concluded that it is in the best interests of all parties involved for Arca Continental to focus on the Southwest transition, while UNITED will turn its full attention and resources to its previously announced Atlanta market transition. Consequently, Birmingham, AL – based UNITED will no longer participate in the Southwest joint venture. With their expected future territories neighboring each other, both Arca and UNITED have shared their optimism about their respective transitions and look forward to collaborating and sharing best practices.
Arca Continental is continuing to work toward a Definitive Agreement with The Coca-Cola Company for bottling territory in a large portion of the Southwest United States, including Texas and parts of Oklahoma, New Mexico and Arkansas.
MOST RECENT LETTERS OF INTENT:
Coca-Cola Bottling Company of Yakima, WA, expects to add territory in Moses Lake, WA. This is a portion of the Pacific Northwest territory that was previously announced under a letter of intent with Swire Coca-Cola, USA. Coca-Cola Refreshments (CCR), a subsidiary of The Coca-Cola Company, currently has exclusive distribution rights in this territory.
In addition to these letters of intent (LOI), The National Product Supply Group (NPSG) announced that it is expanding. NPSG, which was formed to administer key activities for member bottlers, including production of cold-fill beverages; expects to add Coca-Cola Beverages Florida and newly created Midwest Regional Product Supply Group, or Midwest RPSG. The Midwest RPSG will be led by Rosemont, IL-based Great Lakes Coca-Cola Distribution and is anticipated to include other Midwestern bottlers. The NPSG is governed by a board comprised of representatives from its current members, which are Coca-Cola North America, Coca-Cola Refreshments, Coca-Cola Bottling Co. Consolidated, Coca-Cola Bottling Company UNITED and Swire Coca-Cola, USA.
PROGRESS HIGHLIGHTS ON PREVIOUSLY ANNOUNCED LETTERS OF INTENT AND DEFINITIVE AGREEMENTS:
- Atlantic Coca-Cola Bottling Company successfully closed their transaction and assumes new territory that broadens their service area to cover almost all of Iowa and several neighboring states.
- Coca-Cola Bottling Company Consolidated signed definitive agreements to expand its distribution territory in parts of Ohio, Indiana, Illinois, Kentucky and West Virginia; and to purchase manufacturing facilities in Ohio and Indiana.
- Viking Coca-Cola Bottling Company of St. Cloud, MN, closed on its transaction for territories in parts of Minnesota, Wisconsin and Michigan.
- Swire Coca-Cola USA closed on its transaction that began in February, with a Letter of Intent to assume additional territories in Washington, Oregon and Idaho.
- Great Lakes Coca-Cola Distribution has reached a definitive agreement to acquire production facilities in Alsip and Niles, IL, Eagan, Minn. and Milwaukee. Great Lakes has also closed deals for seven distribution centers in the Midwest.
Arca Continental will continue to work with The Coca-Cola Company toward reaching a definitive agreement for territories in Texas, parts of Oklahoma, New Mexico and Arkansas, currently known as the Southwest operating unit of Coca-Cola Refreshments (CCR.) Arca Continental, which is based in Monterrey, Mexico is publicly traded on the Mexican Stock Exchange. Currently, Arca Continental is the second-largest Coca-Cola bottler in Latin America and the third-largest independent bottler in the world in terms of unit case volume.
Ulysses Bridgeman signed a letter of intent to acquire the Missouri, Illinois, Kansas and Nebraska territories from The Coca-Cola Company, including the cities of St. Louis and Kansas City. This LOI also includes acquisition of a production facility in Lenexa, Kansas. Justin Bridgeman, one of Junior Bridgeman’s sons, will lead the new, independent Heartland Coca-Cola Bottling with his father.
Coca-Cola Bottling Company UNITED will acquire Consolidated’s Deep South Territory, which spans parts of Georgia, Alabama, Florida and Mississippi. This territory includes nine sales centers, plus a production facility in Mobile, Alabama. Currently, these operations are not geographically connected to other Consolidated territories, while they are contiguous to UNITED operations.
UNITED will also acquire Consolidated’s Tennessee and Alabama territory that is serviced from its Florence, Alabama sales center, along with Consolidated’s Panama City, Florida territory. These areas are adjacent to UNITED operations and these expected agreements will lead to the creation of more contiguous territories for both Consolidated and UNITED in the Southeast.
UNITED previously acquired territory in New Orleans and New Iberia, LA, along with a production facility in New Orleans. CCBCU will cover territories in north and central Georgia including Atlanta and the Metro Atlanta area, Athens, Macon and Rome. Additionally, as part of the National Product Supply System, CCBC UNITED will acquire production facilities in College Park and Marietta, GA, Montgomery, AL and Cleveland TN. In 2015 CCBC UNITED closed its transactions with The Coca-Cola Company to expand its territory in – Tallahassee, FL; Valdosta, Georgia; Alexandria, Monroe; Shreveport and Natchez, Mississippi. This includes acquisition of the production facility in New Orleans, LA. CCBC UNITED assumed markets in Oxford-Anniston and Scottsboro, AL in 2014 and continues to expand its presence across the Alabama, Georgia, Tennessee and Florida panhandle.
Coca-Cola Bottling Co. Consolidated has signed definitive agreements to expand its distribution territory. The expanded distribution territories include: Cincinnati, Columbus and Dayton, Ohio; Indianapolis, Bloomington, Terre Haute, South Bend, Fort Wayne, Lafayette and Anderson, Indiana; Louisa, Kentucky (which also covers part of West Virginia.) The agreements also include the acquisition of three manufacturing facilities in Cincinnati, Ohio, and Indianapolis and Portland, Indiana. Currently owned by CCR, Coke Consolidated expects to begin a series of transaction closings for these manufacturing facilities in Q4 2016 through 2017.
Coke Consolidated is continuing to work towards definitive agreements with The Coca-Cola Company for the remaining transactions proposed in previously announced Letters of Intent dated February 8, 2016 and June 14, 2016, including the expansion of distribution territories in parts of northern Ohio and northern West Virginia; the purchase of a manufacturing facility in Twinsburg, Ohio; and the exchange of distribution territory in the southern parts of Alabama, Georgia and Mississippi and a manufacturing facility in Mobile, Alabama for distribution territory in parts of Arkansas, southwestern Tennessee and northwestern Mississippi and manufacturing facilities in Memphis, Tennessee and West Memphis, Arkansas. The transactions proposed in the letter of intent would provide exclusive distribution rights for CCBCC in territory that includes the following major markets: Little Rock, West Memphis and southern Arkansas; and Memphis, Tennessee. CCBCC will relinquish distribution rights in territory that includes Mobile, Leroy and Robertsdale, Alabama; Columbus, Sylvester and Bainbridge, Georgia; and Laurel and Ocean Springs, Mississippi.
Coke Consolidated is also continuing to work towards a definitive agreement with Coca-Cola Bottling Company United, Inc. (“United”) for the exchange of distribution territory in south-central Tennessee, northwest Alabama, and northwest Florida for distribution territory in and around Spartanburg and Bluffton, South Carolina, as proposed in the previously announced Letter of Intent dated June 14, 2016 between the Company and United.
CCBCC has already expanded its distribution territory in parts of Tennessee, Kentucky, Indiana, Virginia, Delaware, Maryland and the District of Columbia. Consolidated also completed the acquisition of manufacturing facilities in Sandston, VA and Silver Spring and Baltimore, MD.
Coca-Cola Beverages Florida, will acquire production facilities in the Florida cities of Hollywood, Jacksonville, Orlando and Tampa. CCBF will also assume additional territory in north Florida (including Brevard, Daytona, Jacksonville, Gainesville and Orlando) and southeastern Florida (including Ft. Lauderdale, Hollywood, Miami and West Palm Beach.) As noted above, CCBF will also join The National Product Supply Group (NPSG) as a member Bottler.
Coca-Cola Bottling Company High Country closed its transaction to acquire additional territories in northern South Dakota, the majority of North Dakota, and western Minnesota. This transaction expands Coca-Cola Bottling Company High Country’s existing territories in South Dakota, Wyoming, Montana, Colorado, and Utah. The transaction includes Sales Center facilities located in Aberdeen and Mobridge, South Dakota; Moorhead (Fargo, ND); Morris (Minnesota); Bismarck, Minot, Jamestown, Devil’s Lake, and Grand Forks (including Roseau, MN) in North Dakota. The transaction also included the CCR manufacturing facility in Bismarck, ND.
Swire Coca-Cola USA closed on its transaction that began in February, with a Letter of Intent to assume additional territories in Washington, Oregon and Idaho. This includes the acquisition of cold-fill production facilities in Bellevue, WA (near Seattle) and in Wilsonville, OR (near Portland.) As noted above, Moses Lake, WA, a portion of the Pacific Northwest territory (that was previously announced under a letter of intent with Swire Coca-Cola, USA) is expected to be assumed by Coca-Cola Bottling Company of Yakima, WA. Swire also completed transactions earlier this year to acquire production facilities in Phoenix, AZ and Denver, CO. and assumed the Denver and Colorado Springs markets previously.
Corinth Coca-Cola Bottling Works, Inc. will acquire additional territory in Missouri and Arkansas. Corinth CCBW completed its previous territory expansion into the West Tennessee market with the addition of 13 zip codes across the Dyersburg, Ripley, Covington, and Brownsville communities.
The Ozarks Coca-Cola Bottling Company completed its territory expansion in Northern Arkansas, southeast Kansas and adjoining parts of Missouri. This acquisition includes distribution centers in Joplin and West Plains and adds 37 new counties. With the move, Ozarks Coca-Cola/Dr. Pepper will do interstate business for the first time.
Viking Coca-Cola Bottling Company, based in St. Cloud, MN, as noted above, has closed on its transaction for territories in portions of northern Minnesota, including Duluth and northern Wisconsin, including Ashland and a portion of Michigan. Viking also signed a Letter of Intent with Coca-Cola Bottling Company of Virginia to expand Viking CCBC’s distribution territory in Minnesota. More specifically, the territory covers most of St. Louis County which includes commonly known towns such as Ely, Tower, Biwabik, Hibbing, Eveleth and Chisholm. Coca-Cola of Virginia is currently owned by the Bonner family, who have been in the Coca-Cola business for two generations. Both bottlers have known and worked together for decades and view this as an exciting and beneficial transition for their Companies.
Atlantic Coca-Cola Bottling Company successfully closed their transaction and assumes new territory that broadens their service area to cover almost all of Iowa and several neighboring states. Atlantic will grow from two facilities (Atlantic and Waukee) to nine, adding Ames, Cedar Rapids, Dubuque, Mason City, Ottumwa, the Quad Cities and Spirit Lake. Chief Executive Officer of Atlantic Coca-Cola Bottling Company, Kirk Tyler, stated “We are proud to expand our relationship with The Coca-Cola Company to provide services to an even greater area in Iowa and parts of Minnesota, Wisconsin, Illinois, and Missouri. We are committed to exceeding our customers’ expectations throughout our territory.”
Clark Beverage Group, Inc. – completed their transaction, acquiring territory in Greenwood and Jackson, MS.
Great Lakes Coca-Cola Distribution, L.L.C., will acquire production facilities in Alsip and Niles, IL, Detroit, Grand Rapids, MI, Eagan, MN and Milwaukee, WI along with additional territories in Wisconsin (including Milwaukee), southern Minnesota (including Minneapolis), Michigan, portions of northeast Iowa and northern Illinois adjacent to its Chicago territory. A Letter of Intent for these territories was announced last October. As noted above, the newly created Midwest Regional Product Supply Group, or Midwest RPSG will be led by Great Lakes Coca-Cola Distribution. Midwest RPSG is anticipated to include other Midwestern bottlers.
Coca-Cola of Northern New England, has signed a letter of intent to take on additional territory from The Coca-Cola Company throughout New England. The territory covers several major cities, including Boston, Providence, R.I., and Hartford, Conn. CCNNE will acquire production facilities in Needham Heights, Mass., and Hartford. Bedford, N.H.-based CCNNE has been part of the Coca-Cola System since 1977.
This continues the significant progress The Company and our Bottling community is making toward building a more integrated and streamlined System across the United States. These agreements are part of a plan to refranchise all of The Coca-Cola Company’s North American territories by the end of 2017. Bottlers of Coca-Cola and The Coca-Cola Company are developing a model that evolves the system to serve the changing customer and consumer landscape, with a focus on creating stronger system alignment.
Ultimately, the Coca-Cola system in North America will be comprised of economically aligned bottling partners that have the capability to serve major customers, coupled with the ability to maintain strong, local ties across diverse markets in the United States and Canada.
So far, the Company has reached definitive agreements or signed letters of intent to refranchise territories that account for approximately 65% of total U.S. Bottler-delivered distribution volume; which equates to 71% of total Coca-Cola Refreshments volume. The Company has also reached definitive agreements or signed letters of intent for 43 of the 51 cold-fill production facilities in the United States. As noted in these highlights, the plan includes the sale of North America Cold-Fill production facilities, respective to a Bottler’s territory and agreement. CCNA facilities produce sparkling beverages, such as Coca-Cola trademark brands and Sprite, along with still brands such as Dasani. The Company expects to maintain ownership of its hot-fill facilities, which produce brands such as Powerade and Minute Maid juices. Company-owned hot-fill operations will supply the entire North America Coca-Cola system.
Note: All letters of intent are subject to The Coca-Cola Company and the companies involved – reaching definitive agreements. The parties are committed to working together to implement a smooth transition with minimal disruption for customers, consumers and system associates. Financial terms are not being disclosed.