iNVEZZ.com Saturday, December 14: Coca-Cola (NYSE:KO) this week announced that it will split its North American business into two units in an attempt to expedite its refranchising efforts and streamline its focus. Chief Executive Officer Muhtar Kent also made significant changes to his management team, resulting in the departure of an executive once considered as a candidate to succeed him.
Steve Cahillane, president of Coca-Cola Americas, will leave the company as his unit is dissolved. North America operations, including brand marketing, new product development and food service, will be handed to Sandy Douglas, who stepped aside as president of the region last year. Coca-Cola’s bottling operations in North America will be included in the Bottling Investment Group (BIG) – the company’s international bottling business. The unit will be headed by Paul Mulligan, who has been the regional director of BIG in Japan and Latin America.
“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 a statement. The changes, he said, will “accelerate the refranchising of our bottling system in our flagship market.”
“We have previously believed Cahillane to be a strong CEO-successor, but given the sudden and unexpected nature of his departure announcement, we can't help but wonder what happened?" Wells Fargo analyst Bonnie Herzog wrote in a note to investors. The removal of Cahillane puts Douglas in the running for the top position at the company when 61-year-old Kent retires, according to analysts.
Coca-Cola announced in April it would return to the franchise model in the US. In 2010, the company paid $12.3 billion (₤7.55 billion) to acquire its biggest US bottler, securing its control of both production and distribution. By using franchises, Cola-Cola can lower its costs associated with maintaining warehouses and delivery trucks, while retaining control over the bottling process. Under the previous model, Coca-Cola sold syrup to the bottlers, which produced, packaged and distributed the drinks.
PepsiCo replaces Coca-Cola at Buffalo Wild Wings
PepsiCo will replace Coca-Cola as the supplier to restaurant chain Buffalo Wild Wings, the New York Times reported this week.
PepsiCo has not released the value of the deal, which will come into effect at the beginning of next year. Buffalo Wild Wings operates more than 950 sports bars and grills in the US and Canada.
Analysts on Coca-Cola
TheStreet reaffirmed its ‘buy’ rating on Coca-Cola’s shares in a research note sent to investors earlier this month.
Two equity analysts rate Coca-Cola as a ‘sell’, seven give it a ‘hold’ rating and nine call it a ‘buy’. The stock currently has a consensus rating of ‘hold’ and an average price target of $43.92.
As of Friday, December 13 buy Coca-Cola shares at $39.23.
As of Friday, December 13 sell Coca-Cola shares at $39.23.
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