2019 Beverage Bottler of the Year: Coca-Cola completes bottling initiative

Emblazoned on a beverage delivery truck or in-store, the iconic Coca-Cola logo, originally invented by bookkeeper Frank Robinson in 1886, has evolved into one of the most recognizable symbols in the world. Today, The Coca-Cola Co., Atlanta, offers much more than carbonated soft drinks (CSDs) to consumers. Distributed in more than 200 countries, the beverage giant’s portfolio contains more than 500 brands that are owned by The Coca-Cola Co. like Dasani waters, Gold Peak teas and coffees, Minute Maid and Fanta, or are part of investment and distribution agreements like Monster energy drinks and BodyArmor sports drinks.

As one might expect, bottling and delivering billions of bottles of refreshment to consumers worldwide requires an agile system that not only delivers value to customers across the supply chain but works seamlessly with IT, national and local partners and retailers, to enable consumers to “Taste the Feeling.”

To keep operations streamlined and humming along, the Coca-Cola system in North America embarked on a milestone commitment nearly a decade ago to reshape its North American bottling operations by returning ownership to local partners.

All told, during the span of 10 years, the Coca-Cola Co. and its U.S. bottling partners worked together to execute 60 transitions, which included 350 distribution centers, more than 50 production facilities, more than 55,000 employees and more than 1.3 billion physical cases of volume.

In a statement when the final U.S. transaction closed in October 2017, J. Alexander “Sandy” Douglas Jr., then president of Coca-Cola North America, said: “We are reshaping our business and accelerating our transformation to become a total beverage company. Our system is built to respond to consumers’ needs in a fast-moving and highly competitive environment. Returning the local part of our business to where it really belongs and will best perform — in the hands of local companies — is a key enabler of the exciting transformation and growth of our business.”

Known as Coca-Cola’s 21st Century Beverage Partnership Model, today 68 independent U.S. Coca-Cola bottlers are running their own trucks and bottling operations as a fully refranchised system. Some, like Charlotte, N.C.-based Coca-Cola Consolidated have been part of the Coca-Cola bottling network for more than 115 years, while others, like Reyes Coca-Cola Bottling, Irvine, Calif., just celebrated its one-year anniversary with the system this past October.

The U.S. Coca-Cola system now comprises a diverse array of independent bottlers, from multinational owners to decades-old family held operations. The new system is working to reinvent the future of the business, especially in such key areas as portfolio diversification, packaging innovation, production, procurement, technology and pricing, the company says.

The refranchised system also operates on a new IT platform that enhances efforts to digitize the Coca-Cola system and improve the ability to coordinate and manage information across bottling partners at both local and national levels, the company says.

“We’re incredibly pleased with the newly refranchised Coca-Cola ‘System of the Future,’” said Coca-Cola North America President, Jim Dinkins. “The strength of our U.S. bottling system is now built on the diverse talent and expertise of 68 independent bottlers, and we’re already seeing results in the marketplace as we evolve to a total beverage company. Together, as an empowered and agile franchise system, we’re creating value, building strong brands and refreshing consumers with a wide variety of beverages. Coca-Cola bottlers, with their deep local roots, also are making significant investments to strengthen the communities they serve.”

Key to the success of the 21st Century Beverage Partnership Model is having a re-energized and stronger relationship between the beverage manufacturer and its bottlers, who go above and beyond for their customers, explains James Quincey, president and chief executive officer of The Coca-Cola Co.

The Coca-Cola North American bottling operations completed its historic refranchising initiative in 2017, turning bottling over to 68 independent, local business owners.

“The end of refranchising in North America is gratifying in large part because of the bottlers who have expanded or joined the system for the first time,” Quincey said in the November issue of Beverage Industry. “It shows that this is a great industry with great growth opportunities.

“… We are working together to drive results,” he continued. “… Even the largest companies benefit from localizing. People and relationships drive growth.”

To highlight the transformation, the following are spotlights on six bottlers that are part of the newly refranchised Coca-Cola Bottling System:

Atlantic Coca-Cola Bottling Co. Atlantic, Iowa

Primarily operating out of a 300,000-square-foot warehouse and 90,000-square foot office in Des Moines, Iowa, Atlantic and its roughly 800 employees distribute Coca-Cola brands and cross-licensed brands in the Monster, BodyArmor and fairlife portfolios across 90 percent of Iowa and parts of Minnesota, Wisconsin, Illinois and Missouri.

A Coca-Cola bottler for more than 109 years, Atlantic is a family owned and operated company that strives to execute quickly against all of its core elements in its route-to-market business, says Kirk Tyler, chief executive officer and chairman, who has 40-plus years in the business.

“Like other bottlers, national consumer trends around wanting more variety in flavors have fueled our brand flavor expansion with additional flavor SKUs,” Tyler says. “The trend toward the small batch craft beverage category is not lost on us. We are testing the waters by rolling out Barq’s French Vanilla Crème Soda in limited supply to see if we can get some traction.”

The company continues to see solid and sustained growth around its core brands like Coca-Cola and Sprite, while Coke Zero Sugar, its tea portfolio (Gold Peak and Honest) and vitaminwater also are top performers, Tyler says.

Since Atlantic acquired new territory within the refranchised network on Oct. 1, 2016, the company has grown four times overnight. During the past two years, the company has made major investments in facilities, fleet and information technology. In addition to its current operations in Des Moines, another manufacturing warehouse in Walcott, Iowa, should be operational by spring 2019, to serve the Quad Cities area.

Since joining the refranchised bottling network, Tyler notes that a “hallmark change” involved creating locally led management teams in each of its geographies.

“It is critical for us to have local management which can make local decisions and spend the time to build strong community relationships,” Tyler says. “Being an independent franchise bottler under Coca-Cola allows us to streamline our core business and creates an efficiency that optimizes resources, which then cascades to our consumers and customers in a positive way.”

Coca-Cola Consolidated Charlotte, N.C.

A Coca-Cola bottler since 1902, Coca-Cola Consolidated operates 13 production centers and more than 75 distribution and sales centers, offering more than 300 brands and flavors in 14 states and Washington, D.C., extending its reach to portions of the Southeast, Midwest and the Mid-Atlantic.

With 2017 sales of $4.3 billion, Coke Consolidated dispersed more than 300 million physical cases and served 65 million consumers. “We are honored to be the ‘local bottler’ in the communities we operate throughout our territory. This allows us to cultivate and maintain relationships with our customers and communities to better serve them,” the company says.

Coca-Cola’s Renew Campaign, which focuses on six key areas: Renew Our Products, Renew Water, Renew Opportunity, Renew Community, Renew Jobs, Renew Understanding and Renew Empowerment, aligns well with Coke Consolidated’s guiding principles, one of which “to serve others,” is at the heart of its Purpose Statement, it says.

“Our goal as a company is to have over 17,000 servant leaders making positive impacts where they live and work,” the company says. “This past year, our company was proud to honor thousands of veterans and members of our military through our Message in a Bottle program, where we presented them positive messages of hope in Coke mini bottles, held special events, and provided tickets to sporting events. Through our ‘Big Hearts. Mini Cans’ program, we awarded thousands of teachers [with] gift cards and backpacks full of supplies for use in their classrooms.”

Coke Consolidated notes that the sparkling mini portfolio, both cans and bottles, continues to accelerate as consumers are responding to an increased variety of packaging options. Functional categories such as energy drinks and RTD coffee also show continued growth, it adds.

The company notes the fun they’ve had leveraging the Share a Coke campaigns, which provides Coca-Cola bottlers and its customers with a unique way to generate profitable, incremental sales while creating a personal consumption experience for the consumer.

Coca-Cola Beverages Florida LLC Tampa, Fla.

Part of the Coca-Cola system since May 25, 2015, Coke Florida is the first greenfield bottler in nearly 60 years, the company says. Coke Florida sells, manufactures and distributes more than 600 Coca-Cola products in nearly 70 percent of the Sunshine State.

In 2017, more than 100 million beverages were sold and distributed from 17 manufacturing and distribution locations across the state, including Orlando, Tampa, Jacksonville and Hollywood, says Troy D. Taylor, chairman and chief executive officer (CEO) of Coke Florida.

Also playing a significant role in the bottler’s reach has been eCommerce. “Coke Florida is excited to be the first bottler to offer eFulfillment through Coke’s relationship with a major online retailer,” Taylor explains. “Since July 2017, we have delivered more than 36,000 cases through our partnership — and in 2018, we had our first 500-case day.

“We’re the first bottler ever to do this, and we’ve added a new team of people dedicated to growing our eFulfillment business,” Taylor continues. “The benefits of being an independent franchise bottler under Coca-Cola is enormous because Coke communicates quality. As an independent bottler, we can the leverage the brand and focus on the local market we operate in.”

Since joining the network, Coke Florida invested $10 million to improve its fleet by adding 171 new vehicles designed to provide more efficient deliveries in the many urban areas it serves. In one location, it has invested more than $40 million to replace bottling lines and increase capacity.

“We have 14 lines running cans as fast as 1,550 cans a minute, and are running PET as fast as 900 bottles a minute,” Taylor says. “… The Jacksonville facility has enabled additional flexibility in the Coke Florida system by adding the capability to produce 7.5-ounce sleek cans.

“Overall, we are projected to invest close to $300 million back into the company by 2020,” he continues. “Coke Florida’s success in the competitive beverage business is built on our ability to leverage the growth and expansion opportunities that exist in the Florida market. It’s our job to figure out what consumers want and to deliver that to them on a consistent basis.”

Heartland Coca-Cola Bottling Co. Lenexa, Kan.

Heartland Coca-Cola Bottling has been a Coca-Cola bottler since February 2017. With 2017 sales of more than $600 million, Heartland is focused on driving innovations across its sparkling, still and energy categories, and is seeing its diet sparkling business outperform the category because of consumers reducing their sugar intake, it says.

“We are seeing an increase in the demand for transaction packages, coffee and tea, and our Monster line-up,” says Rick Frazier, president and chief operating officer. “As a system, we are also seeing an increase in our sparkling business.”

In order to better serve its local customers and communities, Heartland operates as seven “hometown bottlers” across its entire footprint, which spans Kansas, Missouri, Illinois and a small part of Nebraska and Iowa. The bottler maintains 19 locations with one production facility, one hub warehouse and 17 sales and distribution centers.

Employing about 2,000 team members, the company has found success by focusing on its employees, its customers and its communities to drive positive results, it says.

With an eye on sustainability, Heartland installed a $1.2 million Nano Filtration Water System to increase supply output of treated water with a significantly smaller footprint. This is in addition to the company’s unique uniforms, which are made of recycled plastic bottles, it says.

“Each shirt is made of approximately 30 plastic bottles,” Frazier explains. “With our first order, we have been able to recycle over 200,000 plastic bottles. Our employees were involved in picking the new uniforms and wear-testing. It’s important to them that we invest in this new recycling technology and continue to search for ways we can be sustainable.”

Frazier notes the importance of “team” within the Coca-Cola system, stating: “We consider every employee of our company as a member of the family. When you are on a team, you pull together, you win together and you lose together. When we make a decision, it is not just affecting one person, it impacts a family.”

Liberty Coca-Cola Beverages, Philadelphia

During the past year, the 4,100 employees of Liberty Coca-Cola Beverages have been hard at work operating eight production lines in three plants along with 10 sales and distribution centers based in Philadelphia, New York and New Jersey.

Liberty joined the refranchised bottling network when it acquired Coca-Cola’s New York Tri-State Metro territory in October 2017. In 2017, the bottler generated $1.1 billion in revenue by servicing five states: Connecticut, New York, New Jersey, Pennsylvania and Delaware.

“The counties we serve … cover a population of 28.3 million, with 50 percent of consumers being multicultural and serving one of the largest Hispanic populations in the country,” says Liberty Co-Owners Fran McGorry and Paul Mulligan, who have a combined 50-plus years of Coca-Cola bottling expertise.

Excluding individual flavors, the bottler distributes 62 non-alcohol brands and is realizing solid growth in small packages such as mini-cans and 1.25-liter bottles. It also is seeing accelerated growth in Coca-Cola Zero Sugar, Diet Coke flavors and Seagram’s Ginger Ale.

Since joining the refranchised network, McGorry and Mulligan note the benefits of being aligned with such a recognizable system. “There has been great collaboration in addition to creating a culture of empowerment and accountability throughout our organization,” they say. “We focus on our local communities and invest back into them for long-term growth. We focus on innovation — looking for fast progress, not perfection.

“Liberty can make local decisions in each of our diverse markets with a more efficient process to implement programs,” the co-owners continue. “It also allows us to focus on priorities that are specific to our market, such as emerging brands.”

Reyes Coca-Cola Bottling, Irvine, Calif.

In October 2018, both Reyes and its chief executive officer Bill O’Brien celebrated their one-year anniversary. However, he notes that the bottler’s Coca-Cola journey really began in 2015 when its sister company, Great Lakes Coca-Cola, was formed. Starting with its bottling territory in Chicago, Great Lakes then expanded into five states in the Midwest, followed by the addition of the Reyes’ territory in California and Nevada in 2017.

“The commitment of our parent company to reinvest in our business became apparent early on in our journey,” says O’Brien, a second-generation executive who joined the Coca-Cola family as an intern in 1987. “They are a premier logistics company, a food and beverage distributor with incredible capability, especially in warehouse delivery and local sales,” O’Brien says. “This expertise, together with their willingness to invest in our operations, has and will continue to be a huge benefit to us.”

With $2.3 billion in sales in 2018, Reyes operates a total of 35 plants, including three bottling facilities and 14 soon-to-be 15 bottling lines, and distributes 186 million cases of such Coca-Cola flagship brands as Coca-Cola, Diet Coke, Dasani waters, Gold Peak teas and coffees, Sprite, and ZICO coconut water at 81,000 stores, restaurants, entertainment venues, office and college campuses throughout California, including San Francisco and San Diego, and in parts of Nevada, such as Las Vegas.

“We’re operating in a very unique market,” O’Brien says. “California is now the world’s fifth-largest economy. It’s also incredibly diverse. Latino consumers are quickly becoming the majority of consumers in California and Nevada, and California is home to the fastest-growing Asian Pacific-Islander community in the country.”

O’Brien also points out that four of the Top 6 U.S. cities for millennials are in California and Nevada.

Being an independent Coca-Cola franchisee enables Reyes to segment its market, tailor its brands and adjust its go-to-market strategy to provide faster, nimbler and high-quality service to its associates and customers, it says.

“On the still beverage front, innovation is resonating best with our consumers and customers,” O’Brien says. “Brands such as Monster have entered new categories (e.g., coffee and hydration) and smartwater has added brand derivatives such as antioxidant and alkaline offers that are performing very well.

“The same can be said for our strong set of brands in protein, like Core Power and Yup, from our partners at fairlife,” he continues. “Finally, our most recent brand additions like BodyArmor and Topo Chico Agua Mineral are poised for growth.”

O’Brien adds: “We are fortunate enough to be part of a company that has grown tremendously in its 42-year history and continues to grow as we explore new ways to better serve the food and beverage industry.”

Coca-Cola Canada Bottling LTD. (CCCBL)

To complete its refranchising efforts in North America, in October 2018, CCCBL announced its acquisition of Coca-Cola Refreshments Canada and returned the 120-year-old Canadian bottling operations to Canadian ownership. CCCBL is a Canada-based joint venture between businessman and philanthropist Larry Tanenbaum O.C., and Junior Bridgeman, entrepreneur and owner of Heartland Coca-Cola Bottling Co. in the United States. Todd Parsons is president and CEO.

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