Ozarks Coca-Cola Bottling Co. announced May 25 its intention to acquire three new service territories, including Northwest Arkansas.
The Springfield, Missouri-based bottler and distributor has signed a letter of intent to buy territories owned by Atlanta-based The Coca-Cola Co. in Northwest Arkansas. Ozarks is also acquiring additional territory in small areas of Kansas and Oklahoma.
The official transition date isn’t expected to be complete until 2017, pending a definitive agreement between the two companies.
The acquisition is tied to Coke’s May 25 announcement of its plans to refranchise a large chunk of its bottling operations to a joint venture headed by Mexico’s Arca Continental SAB, the company’s second-largest bottler in Latin America.
The transactions include territories in Texas and parts of Oklahoma, New Mexico and Arkansas.
Included in that is Great Plains Coca-Cola Bottling Co., based in Oklahoma City, and the current rights holder to the sale and distribution of all beverage brands under the large Coke umbrella — including Powerade, Dasani, Sprite and others — in Benton, Washington, Carroll and Madison counties.
Those territories and the Kansas/Oklahoma piece were broken off by Coke and made available to Ozarks for purchase.
As part of the deal, Ozarks will also acquire Great Plains’ 39,000-SF dry warehouse and sales/distribution facility at 474 Industrial Drive in Tontitown.
Financial terms were not disclosed. A Coke spokesman also declined to say how many customer accounts Great Plains has in Northwest Arkansas.
Ozarks is a family-owned independent bottling company founded in 1920. It operates a manufacturing facility in Springfield, as well as sales and distribution branches in Springfield, Bolivar, Rolla, Joplin and West Plains. The business employs more than 500 and has approximately 1 million local, regional and national customers.
The company entered the Arkansas market last fall when it completed the purchase of Coke-owned territories and distribution centers across the northern part of the state.
Sally Hargis, Ozarks’ vice president and chairman, said the new territories should increase the company’s size by about 40 percent.
She explained that the Coke reshuffling is all tied to an ongoing effort announced by the company in 2013 to refranchise its company-owned North American bottling territories, called “21st Century Beverage Partnership Model.” Doing so will reduce costs associated with maintaining warehouses and delivery trucks.
The strategic decision was an about-face to Coke’s actions in 2010 when the company paid $12.3 billion to buy its biggest U.S. bottler. That move secured control of production and distribution for Coke, whose strategy for decades had been to set up large, independent bottlers run separately from Coke itself.
Great Plains was acquired in 2011 by Coke for a reported $360 million. At the time, Great Plains was the fifth-largest independent Coke bottler in the U.S.
“Methodically, [Coke] is selling the [territories] they own back to the independent bottlers,” Hargis said. “That is what promoted our first expansion and gave us our first entry into Arkansas.”
Sandy Douglas, head of Coke North America, said in a statement that the company has made significant progress toward implementation of the initiative. The company expects to finish refranchising company-owned territories by the end of next year.
“As we continue to evolve our partnership model for growth, Ozarks Coca-Cola brings deep, local knowledge and has demonstrated both outstanding commercial capabilities and consistent, sustainable success within their communities,” he said.
Hargis said she was excited to add new employees to the company, but was unsure how many that would be.
A spokesman for Coke North America said there are 125 employees who work at the Tontitown facility.
“They will either go to the new joint venture, or to Ozarks,” Hargis said. “How we will use that warehouse, I don’t know.
“I expect we will have a significant presence in Northwest Arkansas. There are a number of great companies there. [Wal-Mart Stores Inc.] is certainly the largest. But all of the companies that have headquarters there will be important customers, and we’ll also have a lot of great smaller customers.”