Coca Cola Co., creator of the most popular and saleable soda in the world, has again changed its direction on one core element of its business model. It is modifying the way it controls manufacturing and distribution without direct ownership.
If this giant cola pushes the right buttons, it may get it right this time.
The leading soft drinks manufacturer is racing to sell its manufacturing and distribution units in 2017. The report from the Wall Street Journal said that the company is doing this in its bid to concentrate more on profitable making operations.
Coca Cola initially wanted to re-franchise its delivery trucks and warehouses while keeping its bottling operations. The objective is to close some operations and modernize the rest.
However, its bottling partners were not willing to get the trucks without the manufacturing facilities, according to the report.
Coca Cola is not the only company which has chosen this business approach. Marriot International, a global hotel chain has also listed off properties through management contracts or franchise agreements in the recent past.
Darden Restaurants, operator of large fast food chains also stated in 2015 that it will transfer hundreds of its restaurants to a real-estate investment trust that is publicly traded.
The soft drinks company said that its smaller U.S. partners are better distributors since they have local concentrations. In addition, the latest decision-making structure of bottlers guarantee that production will benefit by having a national scope.
"The marriage of national with local is the best of both worlds,'' said Sandy Douglas, Coca Cola's North American chief.
This massive divestment initiative was not really what the soft drink maker planned to do when it acquired its biggest bottler six years ago for $12.3 billion. But times they are a-changing and the bottom line of the business determines the practical course of action to take.
