‘We Know What We’re Good At,” Says Coke Supply Chain Chief.
Two Juice Plants to Close Later This Year.
Coca-Cola has agreed to sell three hot-fill plants to Refresco as part of an ongoing “asset right” market strategy, according to Mark Rahiya, Coke’s chief supply chain, technical and innovation officer. The plants in Truesdale, Missouri; Waco, Texas; and Paw Paw, Michigan produce brands such as Powerade, Minute Maid Juices To Go, Vitaminwater, and Gold Peak teas. With the deal, Netherlands-based Refresco becomes a strategic third-party contract manufacturer for Coca-Cola in the US. Coke also will shut down two additional hot-fill plants in American Canyon, California, and Northampton, Massachusetts, Rahiya told BD in an interview. Volume at the closed plants will be transferred to other contract manufacturers, he said. Refresco is owned by a private equity consortium that includes PAI, which just signed a JV deal with PepsiCo to take a majority stake of Tropicana.
PURSUING FLEXIBLE NETWORK STRATEGY. “The key goal of our asset right strategy is to build a network of scaled, capable, third-party co-packers who can help us drive growth, unlock value, and lead innovation for the long term,” Rahiya said of the Refresco agreement, which includes long-term production of Coke-owned brands. “We know what we’re good at. We are great in brand marketing, we have strong customer partnerships, and we have a strong franchise system. And we’re good in our supply chain, too. But we also know there are others out there who have deeper expertise in particular areas than we do.” Rahiya said Coke wants to be sure that the company’s supply chain network “can deliver all the scale and flexibility and innovation” needed. “We want to be able to experiment with platforms, products, and packaging across our business,” he said. “Working with select co-packers will give us an opportunity to move faster in this space, including in sustainability.”
SHEDDING ASSETS. Following Coca-Cola’s refranchising of its North American soft drink production and distribution system, which concluded in 2018, the company set out to divest non-carbonated beverage production assets in the US as well. As BD previously reported, Coke sold a bottled water plant to Niagara and closed two others last year. At the time, Coke was said to be shopping the hot-fill assets. Coke continues to own hot-fill lines in Auburndale, Florida, and Lehigh, Valley, Pennsylvania. Two juice plants in Apopka and Dunedin, Florida will close by the end of this year.
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