i thought JB was the guy to turn cce around???? he is no different than alm. talk a big game award yourself big annual pay raise and bonus and on and on and on! in december 2007 and april 2008 he tells the analysts that the business is on track and 2008 will be a solid year then yesterdays announcement. what reports has he been looking at? i have entered posts on this message board every month this year informing everyone that our volume was down and that vitamin water was not giving our company the sales velocity that had been budgeted. da!! i am just a sales center middle management smuck and i knew that our business sucked. the BOD should be all over JB TM BD and team for this terrible suprise!! bring back HENRY bring back HENRY bring back HENRY!!
I certainly do get it....I've been around from the days when CCE barely had cash flow to make payroll some weeks.
The question from canoodler was what is the fair share for CCE, and obviously the trade off comes from KO in terms of ingredients costs and or marketing support. CCE is on their own for managing costs, executing marketing programs, and building a talent base to last for more than three years.
Every supplier/buyer goes through an analysis which evaluates...am I getting value for my investment. The supplier must generate an ROI from the product line sold, and the buyer must generate ROI on the end products derived from what is purchased.
In most markets, there are alternative sources. Cans, HFCS, PET bottles, corrugated, POS etc are all bought on a relative value basis. None of those suppliers wants to price themselves out of the market.
None of that applies to the KO/CCE relationship. KO has a monopoly on ingredients.
The only leverage CCE has with KO is political. It is in KO's best interest for CCE to be fiscally healthy, because they can do more in the marketplace. Look at what has happened as CCE weakened ? Declining visibility in the stores, declining service levels, declining product availability with fewer displays, declining key customer support, and eventual loss of share which impacts KO volume.
And since KO has less than 40% of shares of CCE, why haven't the other 60% pursued a course of action to improve their respective ROI as CCE shareholders ?
in the 90s unemployment was higher than it is today and our debt load was twice what it is today and Henry found a way to make CCE work. he was a great hands on leader unlike JB, Alm and others. the problem with CCE today is the fact that JB has not made any changes on his team in north america. great leaders make the hard decisions with people and JB has shown the world that he cant make the hard decisions. TM, MS, DM and so on are a bunch of old coke system losers who need to go. getting rid of these losers who smoke their own exhaust is about as likely as CCE stock breaking $30!! under the right leadership CCE can work just like DPS, PAS and PBG.
let's be real, what could JB actually do with the hand he was dealt. no one can win with such a hand. the bottom line is that everything is working against CCE - volumes, prices, consumer preference, commodity prices (fuel, plastic, aluminum), and the u.s. economy in general (notice the huge rise in unemployment today, consumers will not be spending money on cola, bottled water, vm, etc.) Q2 results will be worse that what was projected just recently and don't be surprised if cce swings to a loss by year end.
i get it more than you could ever imagine! ko has always controlled cce and this is not anything new. what this current executive team led by JB doesn't get is how to execute at the street level how to forward plan and forecast and how to manage the beverage analysts. a complete lack of leadership!!
What is the fair share for the automakers and the local dealers ? Automakers cannot succeed without a strong dealer network.
What is the fair share for any fast food franchise parent and the franchisees ? Franchisors cannot succeed without strong franchisees.
The market ultimately decides what is fair.
Does KO want CCE to be strong financially or does KO want CCE to be dependent and leveraged to KO (or financial institutions beholden to KO).
Henry? He took advantage of the financial structure just Mr. G/Ivester did at KO. Henry would also be caught up in the downdraft of deleveraging the financial structure during times of increasing commodity costs. The '80s and '90s were a mirage - there is only a soda business. For CCE to let KO off the hook for soaring plastic, aluminum, fuel, employee costs, balance sheet deleveraging that affects re-investment, etc. etc. is a shame. For CCE shareholders not to recognize what has happened, and still needs to happen, is not.
not sure how he did it but Henry was amazing. he lived in the sales centers and on the street visiting customers and speaking with our front line employees. he had the unbelievable talent to treat people the same at all levels whether internal or external. this builds confidence in your team and your customers and ultimately drives momentum. Henry is the last and the only cce ceo that the analysts have ever believed in and trusted. somehow he was able to get the funding recipe right with ko and the end result was both stocks soared!! bring Henry back and cce share price jumps 30%!!
Canooodles, you can't have it both ways.
You can't complain or comment that Henry or anyone else only survived based on the fiscal generosity or balance sheet support of KO, then turn around and in the same breath complain or comment that CCE needs to get help or support from KO due to rising costs, decliing demand etc.
Either CCE has or needs KO price support, or they don't.
Obviously, the stock valuation depends on KO providing economic support to generate the level of return which satisfies typical investors.
KO support...strong share price performance.
No KO support....weak operating performance.
In all fairness to Brock, no one executive can save this company. the FUNDEMENTALS are seriously working against them. who can conrtol commodity prices? who can make consumers drink more soft drinks (or sparkling beverages as they now call them)? who can improve the protfolio overnight to be more in-line with consumer preferences? who can majically improve the realtionship between CCE and KO?
Brock, and anyone else who sits in this chair, has to deal with serious problems. raising prices will not do it. there are no more costs to be cut (in a manner that wont seriously compromise the business). things will get worse. it is certain that memorial day was bad, very weak. consumers will not spend a whole lot of money on soft drinks and vitamin water this summer with gas and food prices so high. let's face it, this business is broken and there is no easy answer.
i now wonder what Brock is really up to. is he playing his hand as he did with arizona tea, forcing KO to make a move and buy vitamin water. noticed how quickly KO cmae out to say that its business will be fine becuase of international operations, basically throwing in the towel on north america. so what will KO do next? what will CCE do next? no easy answers, but it is clear that the problems are HUGE!
i predicted $18 before, now i'm think $15. second quarter will be terrible, and i expect them to seriously lower their expectations for 2008 when the announce Q2 earnings.
You ask, "who can majically improve the realtionship between CCE and KO? "
That's Brock's responsibility. Hold him accountable. And if you think Brock forced KO to purchase Vitamin Water, think harder. As for your:
"i now wonder what Brock is really up to. "
I'd say he's good for another 1-2 years during which he will be negotiating his retirement plan. If correct, he will not rock the boat by representing CCE shareholder's rights to a better soda margin with KO.