ATLANTA — The Coca-Cola Co. has formed a new National Product Supply System (N.P.S.S.) in the United States, a move the company said puts it on the path toward building “a stronger, more streamlined production system in its flagship market.”
The company said the N.P.S.S. will focus on facilitating optimal operation of the U.S. product supply system for Coca-Cola bottlers. Goals of the system include achieving the lowest optimal manufactured and delivered cost for all bottlers in the Coca-Cola system, enabling system investment to build sustainable capability and competitive advantage, and prioritizing quality, service and innovation in order to successfully meet and exceed customer and consumer requirements.
Three existing independent producing bottlers, Coca-Cola Bottling Co. Consolidated, Coca-Cola Bottling Company United and Swire Coca-Cola USA, as well as the company-owned Coca-Cola Refreshments along with Coca-Cola North America, will be members of Coca-Cola’s National Product Supply Group (N.P.S.G.). The N.P.S.G. will administer key national product supply activities for the N.P.S.S. bottlers, which currently represent approximately 95% of the U.S. produced volume.
|Muhtar Kent, chairman and c.e.o. of Coca-Cola|
“Our U.S. operating model continues to become stronger, more aligned and more competitive,” said Muhtar Kent, chairman and chief executive officer, Coca-Cola. “Today we are taking further action to enable profitable growth for our entire U.S. system. We will leverage the strengths and capabilities of the four largest producing bottlers in our U.S. system, C.C.R., Consolidated, United and Swire to operate as one highly aligned and highly competitive national product supply system.”
Coca-Cola said each N.P.S.S. bottler is expected to acquire certain production facilities from C.C.R. within their transitioning distribution territories. Initially, C.C.R. is expected to divest the following nine production facilities with an estimated net book value of $380 million:
• Consolidated will acquire production facilities in Sandston, Va., Baltimore and Silver Spring, Md., Indianapolis and Portland, Ind., and Cincinnati.
• United will acquire the production facility in New Orleans.
• Swire will acquire production facilities in Phoenix and Denver.
The transition of the production facilities from C.C.R. to N.P.S.S. bottlers is expected to occur between 2016 and 2018. Meanwhile, the sale of additional production facilities from C.C.R. to N.P.S.S. bottlers in previously announced transitioning distribution territories will be considered in due course, the company said.“The National Product Supply System will benefit all of our U.S. bottling partners by driving our production system to manufacture products at the lowest optimal cost,” said Sandy Douglas, executive vice-president and president, Coca-Cola North America. “The board of the N.P.S.G. will focus on infrastructure planning, innovation planning, and optimal sourcing. Importantly, we believe the N.P.S.S. structure allows us to leverage our significant system scale with the unique competitive advantage of being able to act with speed. This will be enabled by the outstanding commercial capabilities of a strong local bottling system.”