Coca-Cola To Restructure Its American Business

The Coca-Cola Company (KO) recently announced organizational and management changes in its Coca-Cola Americas to speed up refranchising to independent bottling partners. Effective from Jan 1, 2014, the North American business of The Coca-Cola Company will be segregated into a traditional company and bottler operating model.

The North American business will comprise two operating units, Coca-Cola North America (CCNA) and Coca-Cola Refreshments (CCR). Coca-Cola North America will be led by J.A.M. Douglas who will head North America Brands, Foodservice, Brand Commercial, Retail Sales, Research & Development, Venturing and Emerging Brands, Strategy, Franchise Leadership and Transformation and the Canadian franchise operations.

Coca-Cola Refreshments (CCR), the bottling operations of North America, will be headed by Paul Mulligan. Coca-Cola Refreshments will be considered as a part of Bottling Investments Group (BIG). Mulligan will lead the operations of CCR Canada, Product Supply Chain and Service, Bottler Commercial, Customer Care and Region Sales.

Changing consumer preferences, increasing health consciousness, rising obesity concerns and growing regulatory pressures have tremendously pressurized the carbonated soft drinks (CSD) category in North America. These category headwinds are thus significantly affecting CSD sales of PepsiCo, Inc. (PEP), Coca-Cola and another beverage company, Dr Pepper Snapple Group Inc. (DPS). The present changes will further boost the growth of the company.

Last year, the company plans to launch a new beverage partnership model, under which it will grant new expanded U.S. territories to five of its bottlers to distribute its beverages. The agreement is expected to improve the efficiency of the operating territories and overall profits in the U.S. by shifting to a more franchise-based model.

The Coca-Cola Company carries a Zacks Rank #3 (Hold).

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