The International Brotherhood of Teamsters has criticized distribution changes made by Reyes Coca-Cola Bottling (RCCB) in Southern California. During a Feb. 13 investor conference call, union leaders said the bottler’s “cost-cutting strategies” have undermined service to retailers and created risk for Coca-Cola’s brands and sales. The Teamsters said a new “static routing system” by Reyes “has cut many customers’ delivery schedules in half” and imposed service fees for smaller orders. The Teamsters summarized results of a survey distributed to Reyes Coke customers in Southern California: 39% reported inadequate stocking of Coke products; 40% said costs have increased for Coke deliveries; 56% said Reyes’ changes have hurt sales of Coke products, with most of those reporting declines of 15% to 30% and adding that sales of Pepsi products increased; About half of respondents said they get less service than before Reyes’ changes; about 18% said Reyes’ new schedule doesn’t include all of the same products. The survey results were based on 107 responses, the Teamsters said. The responses included 21 from supermarkets including Ralph’s, Albertson’s and Vons. Coke Reyes serves about 81,000 customers in the state, a company representative told BD. The Teamsters represent about 13,000 Coke distribution system employees among 1.4 million workers in the U.S., Canada and Puerto Rico.
Response. Reyes said in a statement that it has “increased overall market share in California against our primary competitors” since taking over the territory. “As part of our work to meet evolving customer and consumer needs, we have implemented a new operating model focused on providing the highest-quality products and consistent and reliable customer service while making progress on our commitment to reduce our environmental footprint,” the Reyes statement read. “This proven operating model has enabled our growth within the Coca-Cola system and in other parts of the Reyes Holdings business, including in foodservice and beer distribution.” Coca-Cola was supportive of Reyes’ work, saying, “All businesses must continuously evolve and adapt to new ways of operating, which is what our bottling partner is doing.” A spokesman added, “Reyes is adopting practices in California that have worked for them in other locations and that we have tremendous confidence in their capabilities.”
Perspective. Reyes has already implemented the efficiency program in its Great Lakes Coca-Cola territory anchored by Chicago, as well as in its Nevada territory. The Southern California changes began last year. Reyes will implement a similar program in Northern California starting soon. The company has generally been willing to sacrifice low-margin (small drop) sales and aggressively control distribution costs throughout its $27 billion private empire, which includes a massive U.S. beer distributorship and the largest global commissary distributor for McDonald’s. RCCB hasn’t been afraid to use technology to reduce labor costs. The bottler used artificial intelligence to reduce vending restocking trips in California and Nevada, growing sales in the channel by +6% in 2017 (BD 3/30/18). Reyes also has used a web-based platform called MyCoke.com, developed by Coca-Cola, to take orders from small on-premise customers. Such moves aren’t likely to be welcomed by the Teamsters due to potential job loss. Beer and Soda. In a Feb. 13 note to his clients, Consumer Edge Analyst Brett Cooper said Reyes is “likely playing the long game,” pointing out that Reyes has also purchased Constellation Brands’ distribution operation in Southern California. “It’s reasonable to conclude that they are looking to harmonize distribution in their territories, whereby accounts would garner better service if beer and soft drinks (and potentially other products) could go to market together,” Cooper said.
© 2022 Beverage Digest.
Design, CMS, Hosting & Web Development :: ePublishing