Coca-Cola Co. stated that the new bottling giant plans to slash US$350 million to US$375 million cost every year within three years.
Three bottling companies that serve Coca-Cola Co. are planning to merge in a deal which is designed to slash costs for the beverage giant in the middle of softening demand for carbonated drinks.
Coca-Cola Enterprises Inc., Coca-Cola Iberian Partners SA, are merging operations with Coca-Cola Erfrischungsgetränke AG (CCEAG), which is one of the subsidiaries of the beverage maker.
The new company is named as Coca-Cola European Partners Plc., as stared by officials. The new company is slated to have annual revenues of about US$12.6 billion which includes US$1.6 billion of operating profit.
The unification of the Coca-Cola bottling partner in Western Europe is a stepping stone towards the evolution of the global systems, as stated by CEO of Coca-Cola Co. He further said that the company strives to adapt to the business model for innovation, investment, and growth along with changing marketplace demands.
Coca-Cola Co. stated that it has signed a 10-year deal for bottling with the new company, which has an option to renew the deal for 10 years. The company has been able to secure 10 years of pricing as per the terms of the deal.
The deal is a result of the Coca-Cola Co. grappling with shifting consumer behavior for sugary drinks. Coca-Cola Co.’s revenue dropped in Eurasia and Africa by 10% in the second quarter of the year, with the total operating revenues dropping by 3% though partially it was also because of unfavorable currency rates.
The new bottling company will have 27,000 employees to work in more than 50 bottling plants. The customer base of the company is slated to include above 300 million population of 13 countries of Western European which includes Germany, Spain, Great Britain, and France.