It will refranchise 100% of Company-owned North American bottling territories by the end of 2017, including all cold-fill production facilities.
Coca-Cola has also entered into a non-binding letter of intent to refranchise bottling operations in China to existing partners China Foods Limited (part of COFCO Ltd) and Swire Beverage Holdings Ltd.
Global refranchising
Muhtar Kent, chairman and CEO, said the company “will look very different than today” once the transformation is complete.
"This acceleration of our global refranchising marks a step change in our efforts to refocus The Coca-Cola Company on its core business of building strong, valuable brands and leading a system of strong bottling partners,” he said.
“Expanding Coca-Cola bottlers in various regions will grow in terms of revenue, employment and reach as we transition Company-owned operations to the franchise system. The Coca-Cola Company will return to its focus as a higher margin, higher return and less capital intensive operation.”
Under the accelerated refranchising plans, Coca-Cola will move from a system where around 18% of volumes are produced by Company-owned bottlers (in 2015) to around 3%.
The Coca-Cola system consists of the Company (which manufactures and sells concentrates, beverage bases and syrups) and bottling partners (who manufacture, package and distribute the final beverage).
The Coca-Cola Company reported its fourth quarter and full year results today. Full year reported net revenue declined 4%, with organic revenue growing 4%. Global volumes grew 2% over the year.
Kent added it was important to note that top-line growth was led by the flagship North America market, which had its strongest annual performance in three years.
In this market, it saw growth in Coca-Cola Zero, Sprite and Fanta; but a decline in Diet Coke, over the fourth quarter.
Globally, brand Coca-Cola grew 1%, Sprite grew 3%, and Coca-Cola Zero grew 6% over the year (volume). However, Diet Coke / Coke Light declined 6%.