In order to improve the efficiency of its operating territories and boost overall profits in the U.S., The Coca-Cola Company (KO) is shifting to a more franchise-based model, where it grants territories to its bottling partners across the country.
Last week, The Coca-Cola Company signed Letters of Intent with two U.S bottling partners, Reyes Holdings, L.L.C., and a new Florida bottler. The two new transactions are subject to the parties signing definitive agreements during 2014.
According to the Letter of Intent, Coca-Cola will grant its territories in the greater Chicago area to J. Christopher and M. Jude Reyes of Reyes Holdings, L.L.C. whereas its territories in Central Florida will be granted to Troy Taylor, who will be made the Chairman and Chief Executive Officer of the new Florida bottler.
Reyes Holdings is one of the largest global food and beverage distributors. The company has successfully worked with strong brands in mature markets like North, Central and South America, Europe, the Middle East and the Asia Pacific. The Coca-Cola Company, whose North American business has been soft for some time, is likely to benefit from this agreement in the near future. On the other hand, the new Florida based bottling company, will serve Central Florida and Tampa/St. Petersburg, under the management of Troy Taylor.
Coca-Cola has ownership interests in many bottling operations, including Coca-Cola Enterprises Inc. (CCE), Coca-Cola HBC AG (CCH), Coca-Cola FEMSA S.A.B de C.V. (KOF) and Coca-Cola Amatil Ltd. In April 2013, Coca-Cola launched its new beverage partnership model. According to the new model, from Jan 1, 2014, the North American business of Coca-Cola was segregated into a traditional company and bottler operating model. As a result, Coca-Cola granted new expanded U.S. territories to five of its bottlers to distribute its beverages.