During the Coca-Cola Co.’s fourth quarter earnings call held earlier this week, CEO and Chairman Muhtar Kent stated that the company would “imminently announce new bottling partnerships” in North America. By imminently, he must have meant today.
In a statement released this morning, Coke announced that it has signed letters of intent that will grant distribution territories in greater Chicago and central Florida to two new bottling partners. The cola giant has agreed in principle to grant the Chicago territory to J. Christopher and M. Jude Reyes of Reyes Holdings, L.L.C., a global distributor of food and beverage and the largest beer wholesaler in the U.S. Troy Taylor, who Coke described as a longtime advisor, will become the Chairman and CEO of the new Florida bottler, which will include coverage of the Tampa/St. Petersburg market.
“With the addition of these two partners we continue to transform our U.S. business and move closer to achieving our 2020 Vision,” Kent said in the statement.
Coke’s “2020 Vision,” which it announced in 2009, encompasses a range of goals that the company hopes to reach by the end of the decade, including doubling system revenues and becoming “#1 in the nonalcoholic ready-to-drink business in every market and every category that is of value to [Coke].”
Coke stated that a strong franchise bottling system is a key part of the achieving its 2020 Vision. While the company has since 2010 acquired some of its largest North American bottlers, aiming to reduce costs and streamline business operations amid a weak economy, Coke has consistently stated that it plans to gradually return bottling and distribution franchise rights to independent bottlers.
The company had begun doing so last April when it announced that would sell some of its distribution rights to five independent bottlers: Coca-Cola Bottling Co. Consolidated, Coca-Cola Bottling Company United Inc., Swire Coca-Cola USA, Coca-Cola Bottling Company High Country and Corinth Coca-Cola Bottling Works Inc. As of today, however, only Coke’s deal with High Country, which closed at the end of 2013, has been completed. Coke stated that it expects that it will sign definitive agreements with the other four bottlers later this year.
Here is Coke’s statement on the two new bottling agreements in full:
The Coca-Cola Company Announces Letters of Intent with Two New Bottling Partners
Builds on previously announced Letters of Intent with U.S. Bottling partners, which are expected to reach Definitive Agreement shortly
Implementation of 21st Century Beverage Partnership Model in U.S. Continues
ATLANTA–(BUSINESS WIRE)–The Coca-Cola Company today announced that it had signed Letters of Intent for the granting of territories in the greater Chicago area to J. Christopher and M. Jude Reyes of Reyes Holdings, L.L.C., and in Central Florida – including Tampa/St. Petersburg – to Troy Taylor, who will be the Chairman and Chief Executive Officer of the new Florida bottler.
The two new transactions announced today are subject to the parties reaching Definitive Agreements during 2014. The parties are committed to working together to implement a smooth transition with minimal disruption for customers, consumers and System associates. Financial terms were not disclosed.
“Our 21st Century Beverage Partnership Model underscores the strength of our franchise System,” said Muhtar Kent, Chairman and Chief Executive Officer, The Coca-Cola Company. “With the addition of these two partners we continue to transform our U.S. business and move closer to achieving our 2020 Vision.”
Reyes Holdings is one of the largest global providers of food and beverage distribution services. Its operations span North, Central and South America, as well as Europe, the Middle East and Asia Pacific. Annually, the company delivers more than 800 million cases of high-quality, well-known beer and food products from 120 strategically located warehouses.
“The Reyes family has been tremendously successful in helping drive strong brands in mature markets, and they will be invaluable to our System,” said Sandy Douglas, Group President, Coca-Cola North America.
“We are proud to be new members of the Coca-Cola family,” said J. Christopher Reyes, Founder and Co-Chairman of Reyes Holdings. “We intend to use our distribution experience to ensure that the refreshing taste of Coca-Cola is within ‘an arm’s reach of desire’ for thirsty people throughout the Greater Chicago area.”
Troy Taylor will be the Chairman and Chief Executive Officer of the new bottling company that will serve Central Florida, including Tampa/St. Petersburg. With more than 20 years of business leadership experience, Taylor has significant knowledge in leading strategic initiatives and transactions for franchise-related businesses, including multiple Coca-Cola-related investments.
“Troy Taylor has been a trusted advisor to The Coca-Cola Company on critical strategic initiatives for more than a decade,” said Douglas. “He is well-known and respected by our System, and we are pleased to welcome him as a new bottling partner.”
“I have long believed that Coca-Cola serves up moments of happiness and I am excited to join the Coca-Cola family. This new arrangement expands on an already successful, long-standing relationship I have with the Company,” said Taylor. “Together we are committed to delivering excellent service to customers and refreshing experiences to consumers in the Sunshine State.”
“As we have said, the Coca-Cola System should be a reflection of the communities where we operate and the consumers and customers that we serve,” said Douglas. “Partnering with these two top-notch ownership groups is further evidence of this commitment,” said Douglas.
“Coca-Cola has always been a leader in giving back to the communities where it does business,” said M. Jude Reyes, Founder and Co-Chairman of Reyes Holdings. “As a new member of the Coca-Cola family, we share those values and are dedicated to being the best distributor we can be while contributing back to the communities in which we operate.”
In April 2013, The Coca-Cola Company announced that it had signed Letters of Intent with five U.S. bottlers which committed to creating a stronger U.S. business model through the granting of new, expanded territories. The five bottlers are Coca-Cola Bottling Co. Consolidated, Coca-Cola Bottling Company United Inc., Swire Coca-Cola USA, Coca-Cola Bottling Company High Country and Corinth Coca-Cola Bottling Works, Inc.
The Company is very encouraged by the transition of High Country, which closed at the end of 2013. Looking ahead, the Company is aligned with the other four bottlers announced in 2013. It is expected that they will reach Definitive Agreements shortly and those transactions will begin closing later this year.
In all of the newly granted territories, the new bottlers and The Coca-Cola Company will work collaboratively to implement key elements of their evolving U.S. operating model, including:
- A grant of exclusive territory rights and the sale by Coca-Cola Refreshments (CCR) of distribution assets and cold drink equipment
- A finished goods model under which production assets will remain with CCR, which would facilitate future implementation of a national product supply system
- An improved, more integrated information technology platform
- A new beverage agreement that supports the evolving operating model
About The Coca-Cola Company
The Coca-Cola Company (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands. Led by Coca-Cola, one of the world’s most valuable and recognizable brands, our Company’s portfolio features 17 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, MinuteMaid, Simply, Georgia and Del Valle. Globally, we are the No. 1 provider of sparkling beverages, ready-to-drink coffees, and juices and juice drinks. Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy our beverages at a rate of 1.9 billion servings a day. With an enduring commitment to building sustainable communities, our Company is focused on initiatives that reduce our environmental footprint, support active, healthy living, create a safe, inclusive work environment for our associates, and enhance the economic development of the communities where we operate. Together with our bottling partners, we rank among the world’s top 10 private employers with more than 700,000 system associates. For more information, visit Coca-Cola Journey at www.coca-colacompany.com, follow us on Twitter at twitter.com/CocaColaCo, visit our blog, Coca-Cola Unbottled, at www.coca-colablog.com or find us on LinkedIn at www.linkedin.com/company/the-coca-cola-company.
About Reyes Holdings, L.L.C.
Reyes Holdings, aligned with leading beer brewers and foodservice providers, delivers some of the best-known brands and widest variety of food and beverage items to retailers around the world. Annually, the company delivers more than 800 million cases of high-quality beer and food products from 120 warehouses in North, Central and South America, as well as Europe, the Middle East and Asia Pacific. Reyes Holdings operations include The Martin-Brower Company, L.L.C., a global quick-service restaurant distribution business and the largest supplier worldwide of distribution services to the McDonald’s restaurant system; Reinhart Foodservice, L.L.C., one of the largest broadline foodservice distributors in the United States, and Reyes Beverage Group, the largest beer distributor in the United States representing the great majority of import, craft and domestic beer brands. Reyes Holdings is the 11th largest privately held company in the United States with more than 16,000 employees and annual sales in excess of $22 billion. For more information about Reyes Holdings, visit the company website at www.reyesholdings.com.
About Troy Taylor
Troy Taylor will be the Chairman and Chief Executive Officer of the new bottling company which will have territory rights in Central Florida including Tampa/St. Petersburg. Troy has been involved in the Coca-Cola Bottling System for nearly 20 years as an advisor on strategic matters. He is also Founder and Managing Partner of Spinel Investment Company.