Coke reconfigures Arkansas bottling operations as part of North American shakeup

Coca Cola Co. has reconfigured its Arkansas operations as part of the beverage giant’s continuing efforts to streamline its focus and speed up the re-franchising of its disparate and confusing bottling units into independent companies.

The new changes in Arkansas are part of Coke’s North America shakeup initiated at the beginning of 2014 following the successful restructuring of the world largest beverage and botting conglomerate’s organization and management ranks.

Under the terms of letters of intent signed on May 25 with publicly-held Arca Continental of Mexico, Coca-Cola’s Southwest operation will become part of a newly created U.S.-based bottling venture that will include territories in Texas and parts of Arkansas, Oklahoma and New Mexico and across Latin America.

“These are important agreements that will bring a valued, new partner into the U.S. Coca-Cola system,” said J. Alexander “Sandy” Douglas Jr., President, Coca-Cola North America.

For its part in the Arca deal, Atlanta-based Coca Cola will get a 20% stake in the new, privately held entity called “AC Beverages,” which will also include all of Arca Continental’s existing beverage businesses in Latin America. Today, Monterrey-based Arca Continental, which trades publicly on the Mexico stock exchange, 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.

As another piece of the Arca deal, Coca Cola Bottling Company UNITED, based in Birmingham, Ala., will acquire Coke’s majority stake in its remaining territory in Oklahoma. UNITED will then contribute that territory, along with cash, to the Arca venture and become a joint stakeholder in AC Beverages’ U.S. operations.

According to company officials, Arca Continental will have the majority stake in this U.S. joint venture, where it and Coca Cola will work hand-in-hand with local teams in a solid partnership to benefit the important markets in which they participate. UNITED will continue to independently operate all of its other territories, which are outside of its joint venture with AC Beverages.

The AC Beverages/UNITED joint venture will also become a member of the National Product Supply Group (NPSG). The NPSG was created by Coke in September 2015 to administer key activities for member bottlers, including production of cold-fill beverages. 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.

The AC Beverages/UNITED joint venture will own 11 cold-fill production facilities. Nine are in Texas. Those facilities are located in El Paso, Dallas, Fort Worth, San Antonio, McAllen, Abilene and Nacogdoches, plus two in Houston. The other two facilities are in Oklahoma City and Okmulgee, Okla.

Missouri bottler to acquire Coke’s territories in NW Arkansas, parts of Kansas, Oklahoma

Separately, Ozarks Coca-Cola Bottling Company of Springfield, Mo., has signed a letter of intent to acquire territories owned by The Coca-Cola Company in northwest Arkansas and small areas in Kansas and Oklahoma.

In North America, Coke actually began working with its bottling partners a decade ago on plans to develop a model that evolves the system to serve the changing customer and consumer landscape, with a focus on creating stronger system alignment. A critical step was the company’s acquisition of the North American territories of Coca-Cola Enterprises in 2010.

Since that deal closed, the world’s largest beverage company has accelerated the implementation of the new model by strategically addressing the bottling system, customer service, product supply and a common information technology platform.

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 60% of bottler-delivered distribution volume and 41 of the 51 cold-fill production facilities in the U.S. The current agreements to refranchise the company’s North American bottling territories are expected to be completed by the end of 2017, company officials said.

The new transactions announced in late May are also subject to Coke and the other companies involved reaching definitive agreements. Coke’s Atlanta-based spokesman Scott Williamson did not respond to queries seeking comments for this story.