Coca-Cola Co. (KO) Chief Executive Officer Muhtar Kent, trying to speed efforts to improve the company’s North American distribution system, shook up his management team, resulting in the departure of a leader once considered a contender to succeed him.
Steve Cahillane, president of Coca-Cola Americas, will leave the company as his unit is dissolved, the Atlanta-based company said in a statement yesterday. North America operations, including brand marketing, food service and new product development, will be handed back to 25-year Coke veteran Sandy Douglas, who stepped aside as president of the region in 2012. Coke’s bottling operations in the U.S. and Canada will be folded into the company’s international bottling group.
“We organized the business to intensify focus on key markets, streamline reporting lines and provide flexibility to adjust the business within these geographies in the future,” Kent said in the statement. The changes, he said, will “accelerate the refranchising of our bottling system in our flagship market.”
In 2010, Kent took control of 90 percent of Coca-Cola’s North American distribution network with the purchase of its largest bottler, hoping to stem volume sales declines and boost profit. He is reversing a decades-old model in which Coca-Cola sold franchises in the U.S. to bottlers who handled everything from production to distribution, buying beverage concentrates from Coca-Cola.
Kent in April announced a plan, led by Cahillane, to pull together manufacturing plants nationally under Coca-Cola’s management while transferring warehousing and distribution back to bottlers. Those distributors also may be given a chance to “own a piece” of the national manufacturing system Coke will retain.
A refranchising “should be viewed favorably for Coke,” Dara Mohsenian, an analyst for Morgan Stanley & Co. in New York, said today in a note. Besides cutting costs, the move will unlock higher returns and improve operations, he said.
Douglas will retain his role as global chief customer officer, the company said.
Coca-Cola rose 0.4 percent to $39.35 at 10:09 a.m. in New York.
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