Coke changes fountain options at McDonald’s

In the Atlanta Business Chronicle:
The Coca-Cola Co. will add a new selection of flavors to its fountain machines at McDonald’s Corp.’s 14,000 restaurants in the United States. Beginning this year, the core fountain line-up will include Coca-Cola, Diet Coke, Sprite, and Hi-C Orange. Coca-Cola’s Dasani will remain a national core bottle beverage and now Powerade Mountain Blast and vitaminwater XXX, will be made available as regional bottle options. Plus, Coca-Cola brands such as Powerade, Sprite Zero, Fanta Grape, Fanta Strawberry, Caffeine Free Diet Coke, Barq’s Root Beer, Minute Maid Lemonade and Minute Maid Lemonade Light, will be available as regional fountain options at McDonald’s restaurants. Coke Zero will also be offered in a number of restaurants as part of McDonald’s ongoing beverage development. Atlanta-based Coca-Cola (NYSE: KO) has a 54-year relationship with the fast food chain.

Expanding the options of the drinks that are offered at Mcdonalds is a great way for Coca-Cola to get more products out there to the open. Also it gives the consumers more options when they eat out. I personally drink caffeine free diet coke however the majority of places only offer diet coke. I will be much happier to go eat at a place that offers the drink I prefer to drink with my meal.

Coca-Cola elects CEO as new chairman

Coca-Cola says its board of directors elected Chief Executive Muhtar Kent as chairman of the board.
The Atlanta-based soft drink maker says Kent succeeds Neville Isdell. Isdell retired following the company’s annual meeting Wednesday in Atlanta. The company’s board said in December that Isdell would not stand for re-election as chairman and that the post would be given to Kent. Coca-Cola Co. said Kent was also re-elected as president and CEO on Thursday. Kent became CEO in July.

This move can either make or break a company. Deciding to make the CEO also chairman of the board can turn the company in the wrong direction. However for Coca-Cola at the present time I believe that this is the right move.

Wal-Mart seen cutting bottled water brand space

In an article on reuters.com:
NEW YORK (Reuters) – Wal-Mart Stores Inc may have cut the amount of shelf space it gives the bottled water brands of Coca-Cola Co and PepsiCo Inc, according to a prominent beverage analyst.

Bill Pecoriello of ConsumerEdge Research said he believes that beginning in April, Wal-Mart cut shelf space nationwide for Pepsi’s Aquafina water and Coke’s Dasani water by about 50 percent each as the world’s largest retailer pushes lower-priced brands, including its own private label water.

Wal-Mart could even remove Aquafina and Dasani from its stores altogether, he said.

Pecoriello, who founded ConsumerEdge after leaving Morgan Stanley, said private label soft drink maker Cott Corp is likely picking up some of the space, along with other low-priced regional brands.

Spokesmen from Wal-Mart, Pepsi and Coke all declined to comment.

Pecoriello estimated sales to Wal-Mart make up about 12 percent to 15 percent of total volume for Aquafina and Dasani.

The pullback from Wal-Mart could also impact U.S. volume for the companies’ bottlers, such as Pepsi Bottling Group Inc and Coca-Cola Enterprises Inc, Pecoriello said.

He estimated that bottled water makes up about 8 percent to 10 percent of U.S. bottlers’ domestic volume, and could therefore impact volume trends in the second through fourth quarters.

Pecoriello noted that bottled water is a low-margin business, so the profit impact is much smaller than the volume impact.

Coke shares were down 0.3 percent to $44.98 on the New York Stock Exchange, while Pepsi shares were up 0.2 percent at $52.05.

Why Coke isn’t buying up its Bottlers

In an article in Business Week:

A day after PepsiCo announced a structural revamping with plans to acquire its two largest bottlers, Coca-Cola’s (KO) chief executive dismissed talk of a similar move for his company. “There’s no one road that leads to Rome,” Muhtar Kent said in an Apr. 21 telephone interview after the beverage giant released weak earnings. “This business has been built on the power of the franchise model since 123 years ago. It is the best model when it works well. At times when it’s challenging, it’s not because of the model, but the people trying to make it work.”

Kent’s message of long-term value growth lacked the drama of PepsiCo’s (PEP) plan to purchase its two largest bottlers, Pepsi Bottling Group (PBG) and PepsiAmericas (PAS), and to overhaul its packaging this year. But Kent says he remains optimistic and that Coke is gaining market share despite the poor global economy and sticking to its long-term strategy. Although significantly slower than last year, volume was up 2%, while income was off 10% to $1.36 billion. Wall Street was unimpressed; Coke shares dipped 2.2%, to 43.35. So is Coke flat-footed or ahead of the curve? Kent wouldn’t give a definitive “no” when asked whether Coke might buy its major bottler, Coca-Cola Enterprises (CCE), but repeated that he feels the current arrangement of separate bottler and brand is “the best way to win in the marketplace.” Shares of the Atlanta-based bottler surged on Apr. 20 on speculation that Pepsi’s plan would spur Coke to make a similar bid, but then retreated by 3.5% on Tuesday.

Joint Pricing Decisions
Kent says the relationship between Coke and CCE hasn’t been stagnant. Since he became president in 2005, he’s been working to improve that system, making pricing more transparent to bottlers and thus reducing friction. Almost 90% of bottlers are now participating in a program in which Coke and the bottler agree to adjust pricing jointly in response to market conditions or specific occasions, like holidays, for a limited period of time in order to maintain profits. Other initiatives, including some coordination of sales calls, have reduced costs, one of the rationales Pepsi gave for its move. “We haven’t ended up here with a magic stick,” Kent says. “We’ve been working at this very hard every day.” Earlier he told analysts: “All our bottlers are executing with much more precision and much more passion.” Not having billions in capital tied up in a bottler certainly leaves money to spend on growth. Coke had a major setback in that arena a month ago when the Chinese government rejected its $2.4 billion bid to acquire the country’s leading pure juice brand, China Huiyuan Juice Group. Coke is pushing forward, however, and says noncarbonated beverage sales in the market were up 25% last quarter, led by products like Minute Maid Pulpy. The Atlanta company will invest a further $2 billion in its Chinese operations over the next three years. The one major acquisition Coke has made in recent years, the $4.1 billion purchase of Vitaminwater maker Glaceau in 2007, is paying off, Kent says. Coke has already rolled Vitaminwater, now a $2 billion brand, out to Australia, Britain, and Mexico. By the end of this year, it will be in 14 or 15 markets. “Glaceau was an absolutely critical strategic acquisition,” Kent says. “We’re seeing great momentum.”

Coca Cola has prided itself on being a franchise model. IT has been operating on the same model for 123 years. Coca-Cola was founded in 1885 so this model was adopted soon after the company was started. Pepsi was formed 13 years after Coca-Cola. I believe the model that Coca Cola has been following for 123 years has been working well. However I believe that this franchise model will not always work for everybody. PepsiCo is doing what they beleive will work best for their corporation while Coca-Cola is doing what is best for them. It is also very different for Coca-Cola to buy its bottlers then Pepsi because of the fact that Pepsi is already a more diversified company. Pepsi is involved in more than the beverage segment. I believe that the Coca-Cola’s CEO is working on the following principle: “if its not broke don’t fix it.”

Delaware North says Pepsi, please

In an article in the Buffalo News Business Today:

Pepsi. No Coke. After a 94-year partnership, Delaware North Cos. has ended its contracts with Coca-Cola Co. in favor of a new multi-year deal with PepsiCo. The Buffalo-headquartered global food service and hospitality giant will now exclusively sell Pepsi products at its many park, hotel, casino, resort and airport venues, it announced Thursday. “It was a very difficult and complex decision because of all its moving parts and pieces,” said Michael Reinert, vice president of supply management at Delaware North. “And ultimately it does impact our guests and clients.” The transition from Coke to Pepsi products at Delaware North facilities began the third week of March and is expected to be completed by summer’s end. The deal will not affect Delaware North’s more than 40 Sportservice sporting venue locations, which have private contracts with its beverage companies. Among them are HSBC Arena, which will maintain its partnership with locally owned and operated Coca-Cola Bottling Co. of Buffalo. Still, the local Coke company will lose the rest of its Delaware North contracts. “We’ve had a great relationship with Delaware North over the years,” said Peter Benzino, vice president and general manager of Coca-Cola Bottling Co. of Buffalo. “Nobody likes to lose business, but it was a national decision. Negotiations were driven by Delaware North’s outreach in the rest of the country.” Negotiations, handled by parent company Coca-Cola North America, have been ongoing for months, with word of the transition reaching Coca- Cola Bottling Co. of Buffalo in January. “We knew it was coming. It was no big surprise,” Benzino said. The local company, which employs 150 people at its Town of Tonawanda facility, also has contracts with Coca-Cola Field, which hosts the Buffalo Bisons minor league baseball team. Also unaffected is Boston’s TD Banknorth Garden, home to the Boston Bruins NHL team, which is also owned by Delaware North Chairman and Chief Executive Officer Jeremy Jacobs, Sr. Reinert said a number of factors influenced the decision to switch from Coke to Pepsi, including the beverage vendors’ pricing, service, marketing capabilities, commitment to environmental sustainability and brand portfolio. “Pricing over the entire term of the contract is important, especially when you consider the inflationary pressure experienced in the last year,” Reinert said. The deal makes Delaware North one of PepsiCo’s largest travel foodservice accounts. “We’ve been looking at Delaware North for a long time,” said Jean Jakoby, vice president of Business Development at PepsiCo Foodservice. “It operates in very distinct channels of business into which we wanted to expand our presence and our brand portfolio.” The contracts give PepsiCo products an exclusive arena in more than 200 venues nationwide. “[Considering] the number of locations, you can imagine what kind of volume there would be in a year,” said Glen White, Delaware North spokesman. Though the foodservice sector makes up just a small percentage of both companies’ business, Pepsi and Coca-Cola have been fighting to expand their foodservice presence. “It’s obviously very important for both companies to grow that segment of their business,” said Erin Ashley Smith, a securities analyst specializing in consumer staples for Argus Research Co. “It’s a big positive for Pepsi to get in there after 94 years with Coke.” The deal encompasses all of Pepsi’s beverage products, including industry leaders Mountain Dew, Gatorade and Tropicana. It also includes the company’s line of Frito-Lay snacks and Quaker foods. Delaware North already had relationships with PepsiCo at many locations because of its snack line offering, something Smith speculates could have given the company more negotiating power.

This a big loss for Coca-Cola. However what I have noticed in all of my travels is that the northern states normally like Pepsi better while the southern states like Coca-Cola more. This gain can be a big deal for Pepsi especially after the possibility of losing the Northwest Airlines contract. Also this is a big loss for Coca-Cola cause they have had this contract for 94 years. I think that even though this is a blow to Coca-Cola however I dont think it will hurt them. They just need to continue to pursue the contracts they have and also pursue possible new contracts.

Coke, Braves Ramp up Recycling

In an article in the Atlanta Business Chronicle:

The Coca-Cola Co. and the Atlanta Braves plan to boost recycling efforts at Turner Field this season. Braves game day staff on opening day, April 10, will sport shirts made from recycled PET plastic bottles. Parking attendants, security staff, ushers, game entertainment staff, ticket takers and guest relations personnel will all wear the shirts, which contain yarn made from five recycled plastic bottles. The Coca-Cola Recycling Educational Vehicle will be in front of Turner Field on opening day, educating and entertaining fans with contests, videos, music and prizes. An in-game baseball trivia contest sponsored by Coca-Cola Recycling will give fans an opportunity to win a Braves prize pack including items made from recycled plastic bottles. Throughout the season, Braves fans can recycle their plastic bottles in more than 250 branded recycling bins and barrels placed around Turner Field as part of the recycling and education program supported by Coca-Cola Recycling LLC. Coca-Cola Recycling is a subsidiary of Atlanta-based Coca-Cola Enterprises Inc. (NYSE: CCE).

This is very important for both Coca-Cola and the Atlanta Braves. Coca-Cola is one of the biggest sponsors of the Atlanta Braves along with Delta Airlines. With this partnership Coca-Cola can make a bigger impact on the environment. Some people believe that these steps are not really going to help the environment. However I believe that every little bit helps. Also this shows to the consumers that Coca-Cola along with its partners can help by improving the environment. By increasing the awareness of recycling and the benefits it will also show their consumers they truly care.

Coca-Cola orders Hybrid Trucks

In an article on outsourced-logistics.com:

Coca-Cola Enterprises, the world’s largest manufacturer of Coke products has ordered 185 diesel-electric and hybrid trucks from Kenworth Truck Company.

Kenworth Truck Company’s largest-ever order for diesel-electric and hybrid trucks includes 150 Kenworth T370 diesel-electric tractors and 35 T370 hybrid trucks. All of which are expected to be on the road in 2009 as part of the Coca-Cola Enterprises fleet. The Kenworth T370 tractors are rated at 55,000 pounds Gross Combination Weight (GCW) and are, according to Kenworth, the largest hybrid delivery truck on the road in North America. Coca-Cola Enterprises uses tractors as its standard bulk delivery truck for large deliveries, and plans to deploy the Kenworth hybrid tractors to Atlanta, Boston, Chicago, Dallas, Denver, Detroit, Houston, Los Angeles, Miami, Montreal, New Orleans, New York, Portland (OR), San Antonio, San Francisco, Seattle, Tampa, Toronto, Vancouver, and Washington, DC. The Kenworth T370 hybrid trucks (rated at 33,000 pounds Gross Vehicle Weight) will be deployed to Albuquerque, Boston, Cincinnati, Columbus (OH), Jacksonville (FL), Knoxville, Las Vegas, Missoula, New Orleans, and Seattle. They join 120 Kenworth 12-bay hybrid delivery trucks already in the Coca-Cola Enterprises fleet. Coca-Cola Enterprises has achieved increased fuel efficiency and decreased emissions on its original order of 120 Kenworth T370 hybrid beverage delivery trucks deployed throughout the US and Canada last year. “The Kenworth hybrids are performing well, with a more than 30% improvement in both fuel efficiency and greenhouse gas emissions, compared to standard beverage delivery trucks,” said Gary Kapusta, the company’s vice president of indirect procurement.

This is one more step that Coca-Cola is making towards a green corporation. Coca-Cola views the opinions of its consumers very highly. In today’s world consumers want companies they buy from to be green. Also in addition to thinking of their consumers they also are lowering their impact on the environment. They are doing this by lowering theur greenhouse gas emissions and also improving their fuel efficiency. I think that this is a very good move for Coca-Cola. With the governments proposed laws on lowering greenhouse gas emissions this is a good preemptive move for Coca-Cola. I think this is only the beginning on what Coca-Cola can do to improve their mark on the environment.