Coca-Cola Splits in Effort to Focus on Franchising
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Coca Cola Co. announced plans yesterday to restructure its North American business in an attempt to expedite its refranchising efforts and streamline its focus.
As of Jan. 1, 2014, the integrated North American business will be segmented into a traditional company and a bottler operating model. The company will consist of two operating units: Coca-Cola North America and Coca-Cola Refreshments.
“Now, we are in a position to leverage this flexibility to return to a traditional company and bottling operating model in North America, which will enhance our focus on execution and accelerate the refranchising of our bottling system in our flagship market,” said Coca-Cola CEO Muhtar Kent in a statement.
Coke announced in April it would return to the franchise model in the U.S. In 2010, Coca-Cola paid $12.3 billion to buy its biggest U.S. bottler, securing control of production and distribution. By franchising the company, Coke can reduce costs associated with maintaining delivery trucks and warehouses, while retaining control over the bottling process.
Coca-Cola also announced that Americas chief Steve Cahillane is departing. Cahillane was once seen as the potential successor to CEO Kent. Now, Ahmet Bozer, the president of Coca-Cola International who will take control of the Latin America Group in the restructuring, is Kent’s clear No. 2.