Coca-Cola accelerates bottler refranchising plans as it announces full year results

It will refranchise 100% of Company-owned North American bottling territories by the end of 2017, including all cold-fill production facilities.

Coca-Cola has also entered into a non-binding letter of intent to refranchise bottling operations in China to existing partners China Foods Limited (part of COFCO Ltd) and Swire Beverage Holdings Ltd.   

Global refranchising​

Muhtar Kent, chairman and CEO, said the company “will look very different than today”​ once the transformation is complete.

"This acceleration of our global refranchising marks a step change in our efforts to refocus The Coca-Cola​ ​Company on its core business of building strong, valuable brands and leading a system of strong bottling partners,” ​he said.  ​

“Expanding Coca-Cola bottlers in various regions will grow in terms of revenue, employment and reach as we transition Company-owned operations to the franchise system. The Coca-Cola Company will return to its focus as a higher margin, higher return and less capital intensive operation.”​

Under the accelerated refranchising plans, Coca-Cola will move from a system where around 18% of volumes are produced by Company-owned bottlers (in 2015) to around 3%.

The Coca-Cola system consists of the Company (which manufactures and sells concentrates, beverage bases and syrups) and bottling partners (who manufacture, package and distribute the final beverage).

The Coca-Cola Company reported its fourth quarter and full year results today. Full year reported net revenue declined 4%, with organic revenue growing 4%. Global volumes grew 2% over the year.

Kent added it was important to note that top-line growth was led by the flagship North America market, which had its strongest annual performance in three years. 

In this market, it saw growth in Coca-Cola Zero, Sprite and Fanta; but a decline in Diet Coke, over the fourth quarter.  

Globally, brand Coca-Cola grew 1%, Sprite grew 3%, and Coca-Cola Zero grew 6% over the year (volume). However, Diet Coke / Coke Light declined 6%.