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This transaction is a long speculated consolidation of Coca-Cola’s vast bottling network in Europe, impacting 13 Western European countries – including Western Europe’s largest soft drinks market, Germany. The new bottling company will have combined company revenue estimated at US$12.6 billion, according to Coca-Cola Enterprises.
Efficiency, savings….and a powerful new partner for TCCC in Europe
For Coca-Cola and its bottling partners, this move is all about efficiency and savings. Bottling is a capital intensive and expensive enterprise, and The Coca-Cola Co has embarked on a recent process of refranchising these operations to local subsidiaries, spending more of its focus and resources on producing concentrates and the global marketing of its brands. To date, refranchising has mostly taken the form of smaller agreements with existing bottlers in the US, to release more operating territory.
However, this deal is a much larger and exciting proposition, creating the largest independent bottler of Coca-Cola products, and a powerful new partner in Western Europe. The deal seems like an excellent fit for CCE’s capabilities and expertise, bringing the high per capita soft drinks market of Germany under its umbrella, although a private label and discounter intensive grocery retail environment will present immediate challenges. The new entity will also take responsibility for the struggling but high potential markets of Spain and Italy, where there is room to generate per capita growth across soft drinks if economic recoveries take hold.
Three Challenges for the new Coca-Cola European Partners in its largest market
The State of Soft Drinks in the 13 Markets Served by the new Coca-Cola European Partners…