Coca-Cola Bottling Co. Consolidated

P.O. Box 31487
Charlotte, North Carolina 28231
U.S.A.
(704) 551-4400
Fax: (704) 551-4672

Public Company
Incorporated: 1980
Employees: 5,000
Sales: $655.78 million
Stock Exchanges: NASDAQ
SICs: 2086 Bottled & Canned Soft Drinks

Coca-Cola Bottling Co. Consolidated is the second largest Coca-Cola bottler in the United States. This manufacturer, marketer, and distributor of soft drinks, primarily products of the Coca-Cola Company, is the local Coke bottler for almost 15.5 million people and 120,000 retail outlets in 12 southeastern states.

Coca-Cola Bottling Co. Consolidated can trace its history to 1902, when three North Carolina entrepreneurs—J. B. Harrison, J. Luther Snyder, and J. P. Gibbons—set out to bring bottled Coca-Cola to the Carolinas. Before these pioneers got to work, the thirsty had to travel to drugstore soda fountains to enjoy a Coke. In the early days of bottled Coke, production workers washed refiliable bottles by hand, used manually operated bottling machines to fill them, corked them by hand, and sold them from horse-drawn carriages. These efforts helped build a thirst for Coke that survived the Great Depression and the sugar rationing of World War I and World War II. By the early 1970s, hand-washed bottles and horse-drawn carts had given way to sophisticated bottling and distribution operations. The offspring of the first North Carolina bottling companies were beginning to consolidate and expand their territories.

Coke Consolidated traces its more recent history to 1972, when the Charlotte Coca-Cola Bottling Co. renamed itself the Coca-Cola Bottling Company of Mid-Carolinas and began trading its stock publicly. The following year, it acquired the Coca-Cola bottlers in Greensboro, Winston-Salem, Raleigh, and Hamlet. The fast-growing concern became Coca-Cola Bottling Co. Consolidated, which was incorporated in Delaware on May 14, 1980. James Johnson, who started working summers at the Statesville Coca-Cola Bottling Company when he was 11, became president and chief executive officer of both Charlotte Coca-Cola Bottling Company and the Carolina Coin Caterers Corporation in 1969. Johnson saw the new Coke Consolidated through its incorporation as president and CEO; from 1980 to 1987, he was vice chairman of the board and director of public affairs.

In 1983, chairman J. Frank Harrison, Jr., hired Marvin Griffin, from Coca-Cola USA to be Coke Consolidated’s chief executive. Under Griffin’s leadership, Coke Consolidated began to expand its territory more aggressively. In 1984, it acquired three Georgia bottlers: Federal Coca-Cola Bottling Co. in Columbus, the Pageland Coca-Cola Bottling Works, and Waycross-Douglas Coca-Cola Bottling. The following year, Coke Consolidated purchased Wometco Coca-Cola Bottling Co. for $300 million, thereby acquiring new Coke franchise territories in Alabama, Tennessee, Virginia, and West Virginia. The sale of Consolidated Coin Caterers Corp. and 1.5 million new shares helped finance the Wometco purchase. In 1986 Coke Consolidated added bottling companies in Florida, Georgia, Tennessee, and Virginia. In 1987 and 1988, the company sold its Canadian subsidiary and added new territories in Tennessee, Kentucky, and North Carolina.

Several outside factors hurt Coke Consolidated’s profitability in the mid-1980s. First, the introduction of New Coke in April 1985—and the public’s emphatic assertion that it preferred the old Coke—brought big losses to Coke bottlers across the country. Coke Consolidated suffered along with everyone else. The same summer, the Coca-Cola Company began marketing a new line of clothes under the Coke label. Because the new line was manufactured abroad, it created a public-relations nightmare for Coke Consolidated, a company located in the heart of the depressed textile communities of the Carolinas. Coca-Cola responded to consumer protests with a $5 million donation to the textile and garment industries’ Crafted With Pride campaign, but the damage was done. A $5 million settlement in a lawsuit brought by a local bottler also cut into profits. Heavy discounting was unable to raise profits. In April 1987, Griffin was out as CEO.

The difficulties did not impede Coke Consolidated’s expansion. In 1989, the company obtained the Coca-Cola Bottling Company of West Virginia, Inc., from The Coca-Cola Company in exchange for 1.1 million shares of common stock and about $4 million. The same year it added the territories of Dick-son, Tennessee, and Laurel, Mississippi. Coke Consolidated continued to acquire territories in North Carolina, Tennessee, and Mississippi in 1990 and 1991, including the franchise rights for Barq’s and Dr. Pepper in the Jackson, Tennessee, territory.

Coke Consolidated was involved in two price-fixing cases in the late 1980s, winning a major decision in one and arranging a novel settlement in the other. In the first, a major antitrust case, the company was one of several accused of price-fixing by Sewell Plastics, Inc., an Atlanta company that pioneered the development of two-liter bottles for soft drinks. In 1986, Sewell sued Coca-Cola and bottlers in North Carolina, South Carolina, Georgia, Virginia, Tennessee, and Alabama for $17 million, alleging that Southeastern Container Inc., a cooperative the bottlers created in 1982 with the help of Coca-Cola, violated antitrust laws by setting prices for the plastic bottles that the cooperative produced. The U.S. District Court in Charlotte, North Carolina, dismissed the suit, ruling that the formation of the cooperative had actually increased competition and resulted in lower prices to consumers. In September 1990, a federal appeals court upheld the lower court’s decision. In February 1991, the U.S. Supreme Court declined to renew the suit.

In a smaller price-fixing case, Coke Consolidated apparently became the first bottler to use coupons in a settlement. The West Virginia attorney general filed a price-fixing complaint against the company, alleging that it conspired to fix soft-drink prices from 1982 to 1985. Coke Consolidated, which said it acquired the offending bottler in 1985, agreed to settle the case by paying $50,000 to the state and attaching $50,000 worth of 20-cent coupons to two-liter bottles of Diet Coke, Diet Sprite, and Caffeine-Free Diet Coke. It distributed the bottles in areas of West Virginia where the alleged violations occurred.

In late 1991, analysts touted Coke Consolidated as a good stock bargain. Although a price war with PepsiCo’s wholly owned bottling operation kept earnings down, Coke Consolidated pershare earnings were up after losing a cumulative $5.54 between 1986 and 1990. Analyst Joseph Frazzano told Forbes that although Coke Consolidated’s stock was undervalued based on its cash flow, it was no target for an unfriendly takeover raid: the company had 9.2 million outstanding shares, Coca-Cola Co. held 30 percent of the equity, and the Harrison family controlled 86 percent of the votes.

The acquisition of Sunbelt Coca-Cola in 1991 for approximately $15.2 million in cash and company debt helped Coke Consolidated grow by 35 percent in 1991 and 1992. Before the acquisition, Coke Consolidated was the fourth-largest Coca-Cola bottler, with annual sales of $400 million. Adding Sunbelt, number eight with annual sales of $200 million, vaulted Coke Consolidated to second, behind only Coca-Cola Enterprises, Inc., an Atlanta company owned by Coca-Cola Co. By taking on the Charleston, South Carolina bottler, Coke Consolidated continued its growth strategy of purchasing bottlers in adjoining territories.

In 1993, a joint venture with the Coca-Cola Co. gave Coke Consolidated management responsibility for Wilmington Coca-Cola Bottling Works, Inc., Coastal Coca-Cola Bottling Co., and Eastern Carolina Bottling Company. Under the terms of the venture, named the Piedmont Coca-Cola Bottling Partnership, Coke Consolidated acquired new sales centers and territories in parts of South Carolina, North Carolina, and Virginia. The company reported that the joint venture would increase sales by 15 percent and reduce the company’s outstanding debt by about 20 percent. In addition, it gave Coke Consolidated control of more than 90 percent of the territory in the Carolinas.

In the late 1980s, Coke Consolidated invested in advanced computer systems to provide management with timely and relevant data. All its route salespeople received handheld computers to record sales transactions. That innovation allowed salespeople to transmit the information via phone lines and, sometimes, by satellite, to the company’s Charlotte computer center at the end of the business day. The following morning, managers could pull up freshly compiled volume, sales mix, selling price, and gross margin information. Another information innovation, the Lab Management System, allowed the company to store and analyze information on its extensive quality assurance program. Its computer system, Norand, also enabled Coke Consolidated to incorporate new acquisitions into the system almost as soon as it acquired them. The sales centers of the companies involved in the Piedmont Partnership were all operating on Norand in less than two months.

Other Coke Consolidated innovations have come in the areas of customer service and sales. A 24-hour toll-free number allowed customers to call the Consumer Response Center with questions and comments and provided information for the company to use in determining trends and consumer concerns. The “Cold Drink” organization made Coca-Cola products available in factories, entertainment venues, recreation areas, hotels, offices, and schools for on-site consumption. The “fast-lane merchandiser” put cold Cokes at check-out lines in retail outlets to encourage impulse buying.

Coke Consolidated’s close relations with the Coca-Cola Co. have involved marketing collaborations as well as business opportunities. In the early 1990s, Coke Consolidated began working with Coke on the Mello Yello 500 NASCAR race at Charlotte Motor Speedway. In the weeks before the race, point-of-sale displays, visits by show cars and drivers to retail outlets, and tailored advertising drew attention to the race and boosted sales. On race day, 180,000 fans at the Speedway and millions more at home would see the event and the related advertising.

Coke Consolidated earned a record $14.8 million in 1993 on net sales of nearly $687 million, compared to a loss of $118.3 million (attributed to mandatory accounting changes) on sales of almost $656 million in 1992. The net income applicable to common shareholders was $ 1.60 per share. The company attributed the improvement in earnings to the 5 percent boost in revenues, in addition to lower packaging costs, improved operating efficiencies, and the tax and financing cost benefits of a refinancing of preferred stock in late 1992.

These results capped a five-year period during which the company’s sales and operating cash flow nearly doubled, from $389 million in 1989 to 1993’s $687 million. Income from operations during the period increased by approximately 20 percent each year, from $23.8 million to $57.3 million, and adjusted earnings per share (a measure that takes into account earnings per share plus amortization per share) grew by 30 percent annually. The return to shareholders during the five-year period averaged 13 percent.

Coca-Cola Consolidated, a Fortune 500 company, produced more than 343,000 cases of soda per day from its four manufacturing centers—Charlotte/Snyder Production Center, North Carolina; Roanoke, Virginia; Nashville, Tennessee; and Mobile, Alabama. From company headquarters in Charlotte, North Carolina, president and CEO James L. Moore oversaw 10 division offices, 74 distribution centers, and the work of approximately 5,000 employees. The company could boast steady growth, solid family ownership, and a strong relationship with the owner of perhaps the most recognizable brand name in the world. As it looked ahead, Coke Consolidated was confident that it would continue to generate volume growth from within and add new customers through the acquisition of additional territories.

Principal Subsidiaries:

Columbus Coca-Cola Bottling Co.; Coca-Cola Bottling Co. of Nashville, Inc.; Dickson Coca-Cola Bottling Co.; Coca-Cola Bottling Works of Columbia, Tenn.; Coca-Cola Bottling Co. of Roanoke, Inc.; Coca-Cola Bottling Co. of Mobile, Inc.; Albany CCBC Inc.; Panama City Coca-Cola Bottling Co.; Case Advertising Inc.; CC Beverage Packing, Inc.; Tennessee Soft Drink Production Company; Coca-Cola Bottling Company of West Virginia, Inc.; Coca-Cola Bottling Company of Jackson, Inc.; Mrs. Sullivan’s Pies, Inc.; Jackson Acquisitions, Inc.; Sunbelt Coca-Cola Bottling Company, Inc.; Palmetto Bottling Company; Fayetteville Coca-Cola Bottling Company; Coca-Cola Bottling Co. Affiliated, Inc.

Further Reading:

“Coca-Cola Bottling Consolidated: Concern Is Near Completion of Sunbelt Coca-Cola Deal,” Wall Street Journal, December 19, 1991, p. A16.

Cone, Edward, “Are We There Yet?” Forbes, March 9, 1987, .p. 110.

Kenneson, Kim, “Court Upholds Ruling for Bottlers,” Raleigh, North Carolina, News and Observer, September 6, 1990, p. C7; “Coca-Cola Bottler’s Deal Would Make It 2nd Largest,” Raleigh, North Carolina, News and Observer, November 12, 1991, p. Dl.

McCarthy, Michael J., “Coke Bottler to Use Coupons to Settle Price-Fixing Case,” Wall Street Journal, January 18, 1990.

Sfiligoj, Eric, “For Coke Consolidated, Quality Is Job One,” Beverage World, April 1992, p. 58.

“U.S. Supreme Court Won’t Revive Suit Against Coca-Cola, Southeast Bottlers,” Raleigh, North Carolina, News and Observer, February 20, 1991, p. C6.

“Where the Fizz Is,” Forbes, October 28, 1991, p. 219.

—David B. Rice

COCA-COLA BEVERAGES

Coca-Cola Beverages is the world's largest soft drink producer and distributor, holding 47 percent of the global market. The company produces several beverages other than Coke and owns a line of food products. About 90 percent of the company's revenues come from beverage sales, while the balance comes from food sales. Despite its popularity and presence in the United States, 68 percent of Coca-Cola's soft drink products are sold outside North America.

Coca-Cola Beverages is regarded as one of the best managed companies in the world. In Fortune Magazine 's 1997 Annual Survey of corporate reputations the Coca-Cola company ranked first based on its strong marketing skills, financial soundness, corporate and environmental responsibility, quality products and services, and overall business performance. In the same survey corporate executives rated Coca-Cola as America's most admired corporation.

The company traces its origins to May 8, 1886, when the Coca-Cola soft drink (Coke) was invented by pharmacist Dr. John Styth Pemberton in Atlanta, Georgia. Experimenting with a three-legged brass kettle in his backyard, Pemberton mixed caramel colored, cane sugar syrup with carbonated water, caffeine, and extracts from kola nuts and coca leaves. Pemberton's bookkeeper, Frank M. Robinson, suggested the name Coca-Cola. Robinson also created the product's distinctive handwritten logo.

Coke generated profits of only $50 in its first year of sales. Pemberton had to sell two-thirds of his pharmacy business in 1888 to cover his losses. In 1891 Asa Candler, an Atlanta druggist, acquired total control of Coca-Cola for $2300. In 1892 Candler and his partners formed the Coca-Cola Company. That same year Candler spent $11,000 on an advertising campaign that placed the Coke logo on common, everyday household items like calendars and drinking glasses. Candler was among the first businessmen in the United States who used coupons to entice customers to try his product. In 1893 Candler registered Coca-Cola as a patented trademark.

Coke was initially sold as a soda fountain drink. In 1899 Candler sold the rights to bottle his product to two Tennessee lawyers who established an extensive bottling franchise system that still exists today. In 1915 the Root Glass Company designed a contoured glass bottle for the soft drink that was shaped in the form of a coca bean. This bottle design quickly became nationally associated with Coke. During World War I (1914–1918) sugar rationing measures temporarily slowed the company's growth; however, a revolutionary process was invented whereby fuel could be saved by mixing sugar and water without heat.

In 1919 the Candler family sold the Coca-Cola Company to Georgia businessman Ernest Woodruff for $25 million. The Woodruff family presided over the company until 1955 and made a lasting impression on the product's marketing. Under the Woodruffs the familiar slogan "Coke is the real thing" and the six-pack carton of Coke were developed. During World War II (1939–1945) Coca-Cola boosted its image by promising to provide a free Coke to every U.S. soldier. The company also took risks with its image by continuing to distribute Coke from its plant inside Nazi Germany. In the 1950s Coca-Cola took another risk by featuring African Americans in advertisements before the Civil Rights Movement had taken hold.

During the next decade Coca-Cola began to diversify, merging with the Minute Maid Corporation in 1960 and Duncan Foods in 1964. In 1969 Coca-Cola acquired Belmont Springs Water Company. The 1960s also marked the debut of canned Coke and the introduction of four new soft drinks in the United States: Fanta, an orange soda, Sprite, a lemon-lime soda, Fresca, a grapefruit-flavored soda, and Tab, a diet cola. From the 1970s Coke has been packaged in two-liter plastic bottles. In 1982 Coca-Cola introduced Diet Coke, which has outsold all other soda products almost since its inception.

Two years later, in 1984, Coca-Cola began experimenting with its recipe. Concerned by indications that its main competitor Pepsi-Cola had drawn even in market share, Coca-Cola introduced New Coke, a sweeter cola that tasted much like its competition. But the American public rejected the modified recipe, and Coca-Cola returned to producing Coke with its original flavor under the name Coca-Cola Classic. Every year since the change in recipes Coca-Cola has increased its share of the soft drink market. Nonetheless, Coca-Cola still sells New Coke, renamed Coke II, in a number of states.

In the 1990s Coca-Cola continued to challenge itself and the competition. Attempting to reduce Gatorade's dominance of the sport drink market, Coca-Cola rolled out a fruit punch flavored beverage called PowerAde. In 1994 it introduced Fruitopa, a line of fruit juices and teas. The next year Coca-Cola bought Barq's root beer. At the 1996 Olympics in Atlanta, Georgia, Coca-Cola launched a successful $250 million advertising campaign, which spurred sales at double the competition's rate. In 1997 the company began selling Surge, a soft drink marketed as containing higher levels of caffeine and sugar than ordinary soda.

Still headquartered in Atlanta, Georgia, the Coca-Cola Company shows no signs of slowing. Its stock is traded on the New York Stock Exchange and the company is listed on the prestigious Dow Jones Industrial Average Index of blue chip companies. As the century approached its conclusion, Coca-Cola announced that Coke was sold in more than 200 countries at a pace of nearly one billion eight-ounce servings per day.

See also: Charles Hires, Trademark

FURTHER READING

Business News Briefs, "Coca-Cola Buys Barq's." The Arizona Republic, March 30, 1995.

Cox News Service, "Coke Sells Near 1 Billion Per Day." The Grand Rapids Press, March 3, 1998.

Maupin, Melissa. The Story of Coca-Cola. Mankato, Minn.: Smart Apple Media, 1999.

Roush, Chris, "Coca-Cola's outlay for ads rises 41% in Olympic year." The Atlanta Journal/The Atlanta Constitution, March 20, 1997.

"The Coca-Cola Company," [cited April 10, 1999] available from the World Wide Web @ http://www.hoovers.com/.

COCA-COLA

COCA-COLA. The soft drink Coca-Cola was invented by the Atlanta pharmacist and patent medicine maker John S. Pemberton in 1886. Its name, suggested by an employee, Frank Robinson, derived from its two principal drug ingredients, the Peruvian coca leaf (cocaine) and the West African kola nut (caffeine). Coca-Cola was originally sold as a "nerve tonic" to cure the then-popular supposed disease of neurasthenia, and its promoters claimed it treated headaches and hangovers as well. The sugary syrup, mixed with carbonated water, was also sold as a "delicious and refreshing" soda fountain drink.

Pemberton died penniless in 1888, but a fellow Atlanta pharmacist, As a G. Candler, with the assistance of Frank Robinson, made Coca-Cola a national soda fountain success by the end of the century, gradually abandoning patent medicine claims. The current Coca-Cola

Company was incorporated in 1892. Candler saw no future in bottling the drink and gave the bottling rights to Benjamin Thomas and Joseph Whitehead, two Chattanooga lawyers, in 1899. Thomas and Whitehead parlayed the contract into a successful bottling franchise system that truly democratized the drink. In 1903, under considerable social pressure, Candler removed the cocaine from Coca-Cola. In 1919 his children sold the business for $25 million to a syndicate of bankers headed by the Atlanta businessman Ernest Woodruff. Plagued by high sugar prices, Woodruff unsuccessfully attempted to abrogate the perpetual bottling contract. In 1923, his son Robert W. Woodruff took over the presidency of the troubled company and made Coca-Cola, popularly called "Coke," a symbol of the American way of life through ubiquitous, effective advertising. The patriarchal Woodruff passed on every major company decision until his death in 1985 at the age of ninety-five.

During World War II, Coca-Cola was deemed an essential morale booster for American troops overseas, and Coke employees established bottling plants behind the lines, thus positioning the company for swift global expansion in the postwar world. In France and elsewhere during the early 1950s, communists spread rumors that Coke destroyed health and virility, but efforts to halt the soft drink's international expansion failed.

Beginning in the depression era, Pepsi-Cola arose as a fierce competitor, offering more drink for a nickel. Coke finally matched Pepsi ounce for ounce and offered Sprite, Fanta, and other drinks from the 1960s on ward. In the 1980s and 1990s, the aggressive chief executive officer Rober to Goizueta revolutionized the company, giving the revered Coke name to Diet Coke and in 1985 changing the flavor of Coca-Cola in the New Coke disaster. Ironically, this marketing blunder reinvigorated sales of Classic Coca-Cola when the company brought it back after a three-month hiatus. Following brief forays into diversification, notably in Columbia Pictures, Goizueta refocused the company solely on soft drinks. Under his leadership the share price shot up. Following Goizueta's death in 1997, the company entered a difficult period during which its stock declined.

Although the "cola wars" continued into the twenty-first century, Coca-Cola remained the world's preeminent soft drink. The world's most widely distributed product at that time, "Coca-Cola" was reputedly the second best-known word on Earth after "okay." The history of Coca-Cola provides a case study in modern image marketing, in which a fizzy soft drink, mostly sugar water, assumed massive symbolic weight for both critics and advocates.

BIBLIOGRAPHY

Allen, Frederick. Secret Formula. New York: Harper Business, 1994.

Greising, David. I'd Like the World to Buy a Coke: The Life and Leadership of Roberto Goizueta. New York: Wiley, 1998.

Oliver, Thomas. The Real Coke, the Real Story. New York: Random House, 1986.

Pendergrast, Mark. For God, Country, and Coca-Cola. 2ded. New York: Basic Books, 2000.

MarkPendergrast

See alsoSoda Fountains ; Soft Drink Industry .

Coca Cola Trade name for a cola drink, first formulated by John Pemberton, a pharmacist in Atlanta, Georgia, in 1886, as a headache and hangover cure. Originally it contained extract of coca leaves, although this was removed from the formulation many years ago.

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