DarkRange55
Enlightened
- Oct 15, 2023
- 1,684
I did an MBA analysis on PepsiCo years ago. It was like one of a millions projects.
Coca Cola North America does two main things - marketing and syrup. The beverage industry works a bit differently than you'd expect, as many beverage companies don't actually make some or all of their products. Instead they contract with other companies called "bottlers" that make it from a given recipe. Pepsi or Coke will send the concentrated "mix" that contains the flavor. The mixing with water is very precise and monitored. The syrup for the soda is made by Pepsi & Coca-Cola proper. The bottler uses the syrup to make & bottle the drinks. Same idea as syrup for fountain pop.
Same way KFC does it. You send the base flavor, in this case syrup, but in KFC's case the spice mix, to the bottlers(/restaurants). Using the KFC example, you wouldn't ship pre-seasoned chicken all the way from Kentuky to Asia, but shipping a container of spice blend to be shipped to the entire asian continent, is very easy. Its a little more expensive for syrup, as its still a liquid, but works the same way. Although in reality these companies have more local producers of their base ingredient, as it's quite easy to hide the true secret recipe, or just sue anyone who breaks contract on the knowledge of it into oblivion.
Beers work kinda similar. It helps craft beers upsize easier. You can give another bottler your recipe and they'll make it for you under contract. Or vice versa, you can start a brewery bigger than you initially need, and brew other contract for other brands to keep all the equipment running while your own brand grows in popularity. Long story short, it's maximizing the efficiency. A place can make 10,000 barrels a year, they'll make every barrel they can without strictly being one brand.
Coke doesn't own all of their bottlers. The whole bottling industry is a mix match of different stuff and thr drink companies through history go through phases of wanting to own bottlers or not or spinning them off, or contracting and all sorts of stuff. Its somewhat like a franchise model across the industry but it's also bottlers can still engage in other business and even ones owned by the beverage companies do to maintain capacity. This arises out of the issues of distribution. For the most part, soda and beverages need to be made locally because shipping long distance is too costly and impractical and often deals with stores are done on a more local level.
Coke's relationship with its bottlers never really worked like a third party any more than McDonald's relationship with its franchisees is third party. A third party would be more of an "on contract" type of relationship and they could do other things for other companies at will. I think Coke bottlers have to always prioritize Coke and basically follow Coca-Cola's orders.
In the 80s, Coke bought many of the bottling companies and created a company called Coca-Cola enterprises. They bought that company in 2016 and reorganized their bottlers as franchises.
https://www.coca-colacompany.com/news/bottling-operations-return-to-local-partners
The formation of Coca-Cola Enterprises enabled the Coca-Cola Company to shift debt off its balance sheets, and though the company never owned more than 49 percent of any bottler, it exercised control through directorships. The independent soda bottlers are also a bit of a shell game used to keep a lot of things off of CCNA's books. Coca Cola Bottling Company United, a private bottler exclusively bottles Coke products and ships product to other CCBCU facilities AND other Coca Cola bottling facilities. All of the bottlers are on the same ERP system, there are lots of inter company transfers of products, etc.
When an accountant at a small investment firm investigated these relationships, his boss stopped him out of fear of retribution; his next target was Tyco. Coke was found guilty in a Texas antitrust suit brought by Royal Crown distributors. Coca-Cola bottlers were pushed to seek volume regardless of market demand or their own profitability because the company made most of its money from selling Coke syrup to the bottlers.
The plants are either owned by a subsidiary of Pepsi Cola/Coca Cola registered in that country or, more often, by a licensed local agent that is allowed (by that license) to label it's products as "bottled under Pepsi of Coca authority/partnership". The local agent provides the water, workforce, CO2 and sometimes the raw plastic bottles (they came in a small, not expanded, shape). He also pays utilities. Land sometimes is leased for 99 years (some countries don't sell land to foreign corporations).
Pepsi owns a lot of their bottling, especially in the US, but not all. Dr. Pepper is a separate company (Keurig Dr. Pepper), and like Pepsi, they own a lot of their bottling, but not all, and instead contract (license) to other companies to make their product in different areas instead of building their factories all over. Also since it's smaller they use 3rd party distribution, so placed that order through just coke or pepsi can still get Dr Pepper through FSA/Sysco.
One company in eastern Washington Ken Beverage or something had been grandfathered in for decades for distribution. Even though Taco Bell's regional director said they need to go with Pepsi. It's just the way it is. It's a licensed authorized company.
Historically Pepsi and Coke had agreements to bottle and distribute Dr. Pepper. Dr. Pepper is separate company but allowed to be sold in the flavor lineup. As I mentioned above, some regional exceptions exist.
Trucks are most often owned by distributor (or are leased), who may or may not be owned by Coke, Talking Rain, Budweiser etc…
Beverage distributors are usually licensed by the brand. In the case of Coke, Pepsi and others the distributors produce and bottle the brand. They are given distribution rights to a geographic area (my friend's family have the licensing rights for Pepsi distribution for one area). Some distributors own licenses for many areas. I know that is common for beer distributors. In some cases the brand owns the local distributor.
I don't know how movie distribution works.
Coke leases the Freestyle machines. They try to rebate the cost back through discounts on the syrup, etc. Usually restaurants own their soda fountains. The machine takes cartridges vs BIBs (bag in box) that soda fountains use for the syrup concentrates.
Soda fountains are preferred because it's mixing everything when you request a drink so it's crisper plus you can dial in the exact ratios. A "brix cup" is used to create sections to calibrate the mixing on a soda fountain.
With vending machines, you buy them used or lease them from the company. For example, they agree to lease the hotel x amount of machines if they can guarantee you can sell this much product. If a cooler or vending machine is owned by Pepsi, it will have an asset tag.
McDonald's used to use stainless steel drums for Coke. Now they have on site stainless steel vats that a giant truck fills up like a gas station.
The RC Cola story is interesting: https://en.wikipedia.org/wiki/RC_Cola
Pepsi co makes money from small volume but high profit and Coke makes money from high volume, low profit: snack foods.
investors.coca-colacompany.com
pepsico.com
en.wikipedia.org
Coca Cola North America does two main things - marketing and syrup. The beverage industry works a bit differently than you'd expect, as many beverage companies don't actually make some or all of their products. Instead they contract with other companies called "bottlers" that make it from a given recipe. Pepsi or Coke will send the concentrated "mix" that contains the flavor. The mixing with water is very precise and monitored. The syrup for the soda is made by Pepsi & Coca-Cola proper. The bottler uses the syrup to make & bottle the drinks. Same idea as syrup for fountain pop.
Same way KFC does it. You send the base flavor, in this case syrup, but in KFC's case the spice mix, to the bottlers(/restaurants). Using the KFC example, you wouldn't ship pre-seasoned chicken all the way from Kentuky to Asia, but shipping a container of spice blend to be shipped to the entire asian continent, is very easy. Its a little more expensive for syrup, as its still a liquid, but works the same way. Although in reality these companies have more local producers of their base ingredient, as it's quite easy to hide the true secret recipe, or just sue anyone who breaks contract on the knowledge of it into oblivion.
Beers work kinda similar. It helps craft beers upsize easier. You can give another bottler your recipe and they'll make it for you under contract. Or vice versa, you can start a brewery bigger than you initially need, and brew other contract for other brands to keep all the equipment running while your own brand grows in popularity. Long story short, it's maximizing the efficiency. A place can make 10,000 barrels a year, they'll make every barrel they can without strictly being one brand.
Coke doesn't own all of their bottlers. The whole bottling industry is a mix match of different stuff and thr drink companies through history go through phases of wanting to own bottlers or not or spinning them off, or contracting and all sorts of stuff. Its somewhat like a franchise model across the industry but it's also bottlers can still engage in other business and even ones owned by the beverage companies do to maintain capacity. This arises out of the issues of distribution. For the most part, soda and beverages need to be made locally because shipping long distance is too costly and impractical and often deals with stores are done on a more local level.
Coke's relationship with its bottlers never really worked like a third party any more than McDonald's relationship with its franchisees is third party. A third party would be more of an "on contract" type of relationship and they could do other things for other companies at will. I think Coke bottlers have to always prioritize Coke and basically follow Coca-Cola's orders.
In the 80s, Coke bought many of the bottling companies and created a company called Coca-Cola enterprises. They bought that company in 2016 and reorganized their bottlers as franchises.
https://www.coca-colacompany.com/news/bottling-operations-return-to-local-partners
The formation of Coca-Cola Enterprises enabled the Coca-Cola Company to shift debt off its balance sheets, and though the company never owned more than 49 percent of any bottler, it exercised control through directorships. The independent soda bottlers are also a bit of a shell game used to keep a lot of things off of CCNA's books. Coca Cola Bottling Company United, a private bottler exclusively bottles Coke products and ships product to other CCBCU facilities AND other Coca Cola bottling facilities. All of the bottlers are on the same ERP system, there are lots of inter company transfers of products, etc.
When an accountant at a small investment firm investigated these relationships, his boss stopped him out of fear of retribution; his next target was Tyco. Coke was found guilty in a Texas antitrust suit brought by Royal Crown distributors. Coca-Cola bottlers were pushed to seek volume regardless of market demand or their own profitability because the company made most of its money from selling Coke syrup to the bottlers.
The plants are either owned by a subsidiary of Pepsi Cola/Coca Cola registered in that country or, more often, by a licensed local agent that is allowed (by that license) to label it's products as "bottled under Pepsi of Coca authority/partnership". The local agent provides the water, workforce, CO2 and sometimes the raw plastic bottles (they came in a small, not expanded, shape). He also pays utilities. Land sometimes is leased for 99 years (some countries don't sell land to foreign corporations).
Pepsi owns a lot of their bottling, especially in the US, but not all. Dr. Pepper is a separate company (Keurig Dr. Pepper), and like Pepsi, they own a lot of their bottling, but not all, and instead contract (license) to other companies to make their product in different areas instead of building their factories all over. Also since it's smaller they use 3rd party distribution, so placed that order through just coke or pepsi can still get Dr Pepper through FSA/Sysco.
One company in eastern Washington Ken Beverage or something had been grandfathered in for decades for distribution. Even though Taco Bell's regional director said they need to go with Pepsi. It's just the way it is. It's a licensed authorized company.
Historically Pepsi and Coke had agreements to bottle and distribute Dr. Pepper. Dr. Pepper is separate company but allowed to be sold in the flavor lineup. As I mentioned above, some regional exceptions exist.
Trucks are most often owned by distributor (or are leased), who may or may not be owned by Coke, Talking Rain, Budweiser etc…
Beverage distributors are usually licensed by the brand. In the case of Coke, Pepsi and others the distributors produce and bottle the brand. They are given distribution rights to a geographic area (my friend's family have the licensing rights for Pepsi distribution for one area). Some distributors own licenses for many areas. I know that is common for beer distributors. In some cases the brand owns the local distributor.
I don't know how movie distribution works.
Coke leases the Freestyle machines. They try to rebate the cost back through discounts on the syrup, etc. Usually restaurants own their soda fountains. The machine takes cartridges vs BIBs (bag in box) that soda fountains use for the syrup concentrates.
Soda fountains are preferred because it's mixing everything when you request a drink so it's crisper plus you can dial in the exact ratios. A "brix cup" is used to create sections to calibrate the mixing on a soda fountain.
With vending machines, you buy them used or lease them from the company. For example, they agree to lease the hotel x amount of machines if they can guarantee you can sell this much product. If a cooler or vending machine is owned by Pepsi, it will have an asset tag.
McDonald's used to use stainless steel drums for Coke. Now they have on site stainless steel vats that a giant truck fills up like a gas station.
The RC Cola story is interesting: https://en.wikipedia.org/wiki/RC_Cola
Pepsi co makes money from small volume but high profit and Coke makes money from high volume, low profit: snack foods.
Quarterly Filings (10-Q)
investors.coca-colacompany.com
Quarterly Earnings
pepsico.com
Keurig Dr Pepper - Wikipedia
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