Dive Brief:
- Coca-Cola Co. is rolling out a new plan to streamline its production system in the U.S., the National Product Supply System.
- The new National Product Supply Group (NPSG) will include independent bottlers Coca-Cola Bottling Co. Consolidated, Coca-Cola Bottling Company United, Swire Coca-Cola USA and the company-owned Coca-Cola Refreshments and Coca-Cola North America. When combined, these entities account for 95% of the volume produced in the U.S.
- "The initial terms of the agreement call for Coca-Cola Refreshments, which is owned by Coke, to divest nine production facilities valued at about $380 million to the other bottlers between 2016 and 2018," MarketWatch reported.
Dive Insight:
According to a press release, the NPSS's mission is to "achieve the lowest optimal manufactured and delivered cost for all bottlers in the Coca-Cola system; enable system investment to build sustainable capability and competitive advantage; [and] prioritize quality, service and innovation in order to successfully meet and exceed customer and consumer requirements."
"Our U.S. operating model continues to become stronger, more aligned and more competitive. Today we are taking further action to enable profitable growth for our entire U.S. system," said Coca-Cola's CEO Muhtar Kent in a press release. "We will leverage the strengths and capabilities of the four largest producing bottlers in our U.S. system, CCR, Consolidated, United and Swire to operate as one highly aligned and highly competitive national product supply system."
Coca-Cola's global supply chain is seeing consolidation in other areas as well. In July, three European Coca-Cola Co. bottlers, Coca-Cola Enterprises Inc., an independent bottler for Western Europe, independent Coca-Cola Iberian Partners, and Germany’s Coke-owned Coca-Cola Erfrischungsgetränke AG, agreed to a merger, according to The Wall Street Journal, which should close in 2016's second quarter.