Six years ago, Coca-Cola went into the bottling business when it bought the North American operations of Coca-Cola Enterprises.
At Wednesday’s annual shareholder meeting, Coke CEO Muhtar Kent and company president James Quincey said that era is nearing its close.
“By the end of 2017, the amount of global volume accounted for by our company-owned bottlers will drop from about 26 percent back in 2014 to just around 3 percent in 2017,” Quincey said.
Coke has accelerated plans to refranchise the bottling business it took on in 2010, now planning to finish turning distribution back to independent bottlers by December 2017, rather than 2020.
The company acquired CCE to make distribution more efficient and cut costs. Now it wants to shed the operations and focus on brand-building and sales.
The refranchising timetable was laid out at one of the company’s most subdued annual meetings in memory. Normally raucous and sometimes combative, Coke’s meeting Wednesday was orderly, quick and collegial, even during a few rancorous questions about child labor in sugar cane fields around the world.
The setting changed from the Cobb Galleria to a sunny atrium at the company’s own tourist destination, the World of Coca Cola in downtown Atlanta.
The meeting came amid increasing pressure on the company, which turns 130 this year, to reinvent its core business of fizzy drinks — or find new areas of growth. Sales of top soda brands, such as Coke and Diet Coke, have flattened or fallen in North America as consumers switch to water, teas and energy drinks.
Kent pointed to the company’s growing number of $1 billion brands — there are 20 now — and the success of mini-cans as evidence Coke still has the magic touch. The smaller cans, which target consumers who want to cut back on portion size, yield more revenue per ounce.
“In the span of my own career with Coca-Cola – nearly 40 years – I’ve seen our company increase servings from 300 million drinks a day to 1.9 billion today … and soon to be 2 billion,” he said.
A group hoping to convince the company to be more transparent about political contributions and to assess annually the effect of political positions on Coke’s reputation received a chilly reception from shareholders.
In a proposal, the Washington, D.C.-based National Center for Public Policy Research said it wanted Coke to focus on “legislative initiatives that are considered most germane to core company values.” Shareholders overwhelmingly rejected the proposal, with just 2.05 percent approving.
Coke was among companies that called on Georgia legislative leaders earlier this year to reject a “religious liberty” proposal that would allow faith-based groups to cite sincerely held religious beliefs in declining service to gay couples. The bill passed but was vetoed by Gov. Nathan Deal in early April.
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