• Wall Street Journal, Monday, March 15, 2010 10:51 AM

Managing relations with their remaining independent bottlers will be key to driving sales and efficiency, Anjali Cordiero reports, even as PepsiCo and Coca-Cola digest the recent acquisitions of their largest bottlers. Many of the smaller operations are family-run enterprises with perpetual contracts, but they could find themselves squeezed by price promotions that the manufacturers initiate in regions they control.

Thanks to cost-cutting driven by the consolidation, Coke and PepsiCo are expected to be able to offer retailers better deals, which could push smaller bottlers to do the same. "The pressure would be that they might lower prices to major customers on some products, where the independent bottlers may not have thought it necessary in the past," says Marion Glover, president of Glover Capital, which does investment-banking work for the industry.

Also, as Coke and PepsiCo come up with new non-carbonated products, the smaller bottlers will have to decide if they want to invest in new manufacturing capabilities.

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