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Coca-Cola Bottler Deal Signals Shift In Distribution Strategy

Coca-Cola's purchase of Coca-Cola Enterprises' North American operations marks a major change in a strategy that the company has pursued since CCE was formed as a publicly traded company to distribute Coke products in 1986, Betsy McKay reports. The deal was likely given impetus by PepsiCo's pending acquisition of its two largest independent bottlers. Owning their bottlers gives companies greater flexibility in negotiating with retailers.

Coke Chairman and CEO Muhtar Kent, however, calls the proposed acquisition "a natural evolution" to address changing consumer trends, particularly toward non-soda drinks such as bottled waters, juices, teas and energy drinks. Coke will still sell about 72% of its global volume through independent bottlers, Kent points out, and the company remains committed to them.

"Fundamental industry forces have altered the consumer, customer and competitive landscape," Kent told analysts yesterday. "Our franchise system cannot remain static. We have to create the next generation of high-return opportunities."



Bruce Horovitz reports in USA Today that Coke figures that cost efficiencies could help it save $350 million over four years and it may pass some savings on to consumers, particularly for bottled water.

Read the whole story at Wall Street Journal »

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