Coca-Cola disposes off nine U.S. bottling plants as new supply system arises

Coca-Cola Company has plans to dispose off its nine U.S. production facilities amounting to almost $380 million to three bottling companies that help produce its drinks. This is one part of the plan to lessen the costs and streamline operations as reported by Bloomberg.

According to the drinks company, they already have preliminary agreements to sell the plants to Coca-Cola Bottling Co., Swire Coca-Cola U.S., and Coca-Cola Bottling Company United. The contracts which are expected to take effect from 2016 to 2018, are subject to the companies reaching definitive agreements, said the Atlanta-based Coca-Cola in a statement Thursday.

On the same day, Coca-Cola added that it will start a National Product Supply System with its bottlers. The organization will work on infrastructure planning, sourcing, and cost controls, giving Coca-Cola the benefit of centralized bottling operations without the indemnity of actually owning them.

The latest act marks a reversal from the Coca-Cola strategy five years ago. In 2010, Coca-Cola acquired North American bottling businesses, thinking that it could improve operations if it owned them. Kent starts working to return those operations to franchise bottlers in 2013.

In addition, Coke said that all four entities, along with the operating group of Coke in North America, will create a new supply group to come up within areas, including buying of ingredients and launching of new packages. The new group is expected to approximately make 95% of production volume of the company in the U.S., according to New York City News.

The world's largest soda maker is having a sales volume decline in America. The company sells bottling operations that are partially associated in getting its products to retailers and to franchisees to get away from the low-margin and capital intensive business of distribution.

According to Muhtar Kent, Chairman and Chief Executive Officer of Coca-Cola Company, "We will leverage the strengths and capabilities of the four largest producing bottlers in our U.S. system, CCR, Consolidated, United and Swire to operate as one highly aligned and highly competitive national product supply system".

As of the moment, Coca-Cola has not sold its production facilities. The company said that the sale of the manufacturing plants that make soft drinks such as Coke, Sprite, and Fanta is expected to happen between 2016 and 2018.