A beverage division of Hong Kong’ Swire Pacific announced that it had reached an agreement with The Coca-Cola Co (NYSE:KO) covering regions in the Pacific Northeast in America. The world’s biggest soda maker is accelerating its refranchising process.
The document of agreement includes plans to give Swire Coca-Cola USA, more territories in the states of Idaho, Oregon and Washington. The document also contemplates letting the company take over production facilities near Washington, Seattle and other distribution facilities.
Currently, no financial terms have been revealed. President of Coca-Cola North America, Sandy Douglas, said that the company was enthusiastic at the proposed expansion of Swire’s territories in the US. She added that Coca-Cola was also happy that the refranchising process was doing well in North America.
The proposed pact is part of a bottler refranchising scheme in current years by Coca-Cola. This is being done by the company to streamline operations and decrease costs as it performs poorly at home. Earlier agreements to grant territory rights to Swire Coca-Cola included cities such as Tucson, Phoenix, Denver and Colorado Springs.
Swire Coca-Cola’s president and chief executive, Jack Pelo, said that the latest grant of territory rights along with earlier similar actions demonstrate the critical role Swire has in the Coca-Cola company’s refranchising efforts in North America.
If all the territories are given to Swire Coca-Cola as proposed, then the latter would serve a total of 26.6 million people in America. The Coca-Cola Company started collaborating with its bottling partners ten years ago on plans to build a model that evolves a system to serve the altering customer as well as consumer landscape.
An important step was Swire’s acquisition of the North American territories of Coca-Cola in 2010. Since then Coca-Cola has accelerated the deployment of the new model by strategically aligning the bottling system, product supply as well as a common IT (information Technology) platform.
Eventually, the Coca-Cola system in America will consist of economically structured bottling partners that have the ability to serve major customers along with being able to maintain powerful, local ties across different markets in Canada and the United States.