As part of the Coca-Cola Company’s continuing refranchising efforts, the company has signed a letter of intent with Coca-Cola Bottling Co. Consolidated to hand over distribution rights to the bottler in 10 states across the country as well as the Washington, D.C. area. Announced in a press release Thursday, Coca-Cola Bottling Co. Consolidated has been granted new territories in Delaware, the District of Columbia, Illinois, Indiana, Kentucky, Maryland, North Carolina, Ohio, Pennsylvania, Virginia and West Virginia.
The deal is expected to close in the Fall of 2015, at which point Coca-Cola Bottling Co. Consolidated will take on distribution of Coca-Cola products in major markets including Indianapolis, Cincinnati, Columbus, Dayton, Baltimore, Richmond, Norfolk, Alexandria, and Washington D.C.
“We have made significant progress toward the implementation of our 21st Century Beverage Partnership Model in the U.S., which continues to strengthen our franchise system,” said Sandy Douglas, President of Coca-Cola North America. “Today we mark another significant milestone in evolving our U.S. operations as we align for growth with Coca-Cola Bottling Co. Consolidated – a partner that has proven success, taken a generational view and consistently invested in capabilities and leadership. With these expansion territories, we are positioned for long term success and strategic influence in the U.S. Coca-Cola system.”
In BevNET’s March 2015 cover story entitled Coke’s Fight for a Future, GBS Growth Partners Managing Partner and former General Manager of Coca-Cola Enterprises’ West Florida division Jack Brennan called Coke’s return to a franchise model “the single most important thing that they’re doing right now at the company.”
“Being able to manage the U.S. is critical, and this is going to get all the assets off the books and deploy very capable companies to operate for them,” Brennan added.
Coca-Cola Bottling Co. Consolidated’s full press release can be found below:
CHARLOTTE, N.C.–(BUSINESS WIRE)–Coca-Cola Bottling Co. Consolidated (NASDAQ: COKE) (the “Company”) today announced that it has signed a non-binding letter of intent with The Coca-Cola Company to further expand the Company’s franchise territory. The transactions proposed in the letter of intent would provide exclusive distribution rights for the Company in territories located within Delaware, the District of Columbia, Illinois, Indiana, Kentucky, Maryland, North Carolina, Ohio, Pennsylvania, Virginia and West Virginia. This additional territory would include the following major markets: Baltimore, MD; Alexandria, Norfolk and Richmond, VA; Cincinnati, Columbus and Dayton, OH; Indianapolis, IN and Washington, D.C. Coca-Cola Refreshments USA, Inc. (“CCR”), a wholly owned subsidiary of The Coca-Cola Company, currently serves these territories.
The Company recently completed an expansion of its franchise distribution territory by acquiring sub-bottling distribution rights from CCR in parts of Tennessee, Kentucky and Indiana and continues to integrate these new territories which include major markets in Knoxville, TN, Louisville and Lexington, KY and Evansville, IN.
Frank Harrison, Chairman and CEO, said, “We are very excited about this opportunity to continue to grow our Company into additional markets. We are continuing to integrate new franchise distribution territories in Tennessee, Kentucky and Indiana and look forward to serving even more customers, consumers and communities in the geography covered by this letter of intent. With these expansion territories, we are positioned for long-term success and strategic influence in the U.S. Coca-Cola system. ”
Sandy Douglas, President, Coca-Cola North America, added, “We have made significant progress toward the implementation of our 21st Century Beverage Partnership Model in the U.S., which continues to strengthen our franchise system. Today we mark another significant milestone in evolving our U.S. operations as we align for growth with Coca-Cola Bottling Co. Consolidated – a partner that has proven success, taken a generational view and consistently invested in capabilities and leadership. Together we continue to transform our U.S. business and move closer to achieving our 2020 Vision.”
The transactions proposed in the letter of intent are subject to the parties reaching a definitive agreement, with territory expansion closings expected to begin in the fall of 2015. There is no assurance, however, that any definitive agreement will be reached or that the closings of the proposed territory expansion transactions will occur. The Company will file a report on Form 8-K with the Securities and Exchange Commission with additional information regarding the proposed territory expansions and certain other matters addressed in the letter of intent that will be available on the Commission’s website at http://www.sec.gov and on the Company’s website at http://www.cokeconsolidated.com.