You may have read or heard about PepsiCo offering Monday to buy its two biggest bottlers. This is huge news in our industry; a major move.
But what many people might not understand is just why this is big news -- or even news at all. Many may be asking: Doesn't Pepsi already bottle its own products and own the facilities that do that? Same for Coke?
A common misperception amongst many folks is that Coca-Cola and Pepsi are just that: two large individual companies. In reality, they are systems. They are each comprised of large systems of a franchise company and bottling companies.
The franchise companies are what folks often associate as Pepsi and The Coca-Cola Company. In general, these companies make and provide the drink concentrate for products, which they sell to bottlers. They also take the lead in developing, and in some cases acquiring, product lines for their systems. And one of the franchise companies' most high-profile roles is the marketing of the products to the consumer.
The bottling companies, in general, buy the concentrate from the franchise company and then bottle the products. These companies then deliver the products to stores and other outlets. They do some local marketing, sometimes with the assistance of the franchise company. And they do much of the community relations and visibility as they are the folks in the community delivering the products.
Importantly, bottling companies are their own corporate entities, just like the franchise companies. The publicly traded bottling companies have their own symbol on the stock exchange and operate like any public corporation. Some bottling companies are privately held, as many of these companies have been passed down from generation to generation. The bottling side of the systems is very much steeped in a history of family-owned, entrepreneurial, community-oriented cultures.
Employees of the bottling companies are actually the people you see in your local grocery store putting their products on the shelves or driving the delivery trucks around town.
So when PepsiCo, which is the franchise company, offered to buy two of its biggest bottlers, Pepsi Bottling Group and PepsiAmericas, it is making a move to buy two separate companies that anchor its bottling system. So this is big news in that it's an attempt by a major franchise company in our industry to own parts of its bottling system.
Coke also has a system comprised of a franchise company and bottlers. Its biggest bottling companies include Coca-Cola Enterprises, Coke Consolidated, Coke United and Coke Swire.
This structure is part of the essence of what makes our beverage industry so fascinating. It really is an industry that relies on a great deal of teamwork and a unified effort to provide the highest quality products and services from the corporate headquarters into virtually every story in every community in America.
If you're interested in more information on the Pepsi and Coca-Cola systems, a very good trade publication, Beverage Digest, makes books available on these two iconic systems. Go to www.beverage-digest.com for more information.