News On the evening of December 16, Swire and China Foods (listed in Hong Kong under COFCO) respectively issued announcements showing that Swire had successfully won an auction with a bid of 2.122 billion yuan for the rights to nine Coca-Cola bottling plants in southern China that originally belonged to China Foods. This means that the restructuring under Coca-Cola's "dual bottler" strategy in China has taken another step forward. Among the plants sold, two bottling plants with 100% equity were COFCO Coca-Cola Beverages (Jiangxi) Co., Ltd. and Zhanjiang COFCO Coca-Cola Co., Ltd., which were sold for 368 million yuan and 353 million yuan respectively. The most valuable was Guangdong Swire Coca-Cola Co., Ltd., where 19% of the equity was sold for 379 million yuan, followed by Shanghai Shenmei Beverage Co., Ltd., where 14% of the equity was sold for 207 million yuan. After this public sale, China Foods has completely divested its majority stakes in Jiangxi, Zhanjiang, and Hainan, as well as minority stakes in other listed bottling plants. China Foods stated that this sale is expected to generate an unaudited gain of approximately 1.898 billion yuan. Event Review: On August 23, China Foods, a bottling partner of Coca-Cola in China and a subsidiary of COFCO Group, announced its intention to divest the equity of 10 subsidiary companies under COFCO Coca-Cola. According to the list subsequently provided by China Foods, these are the 10 bottling plants jointly owned by Coca-Cola and COFCO (as shown below) – the company plans to sell part or all of the equity in Hainan COFCO Coca-Cola Beverages, COFCO Coca-Cola Beverages (Jiangxi), Zhanjiang COFCO Coca-Cola Beverages, Jiangsu Swire Coca-Cola Beverages, Zhejiang Swire Coca-Cola Beverages, Guangdong Swire Coca-Cola, Wenzhou Swire Coca-Cola Beverages, and Shanghai Shenmei Beverage & Food. On November 19, the signing of the restructuring project for Coca-Cola's bottling business in China set the tone for the future business model. Coca-Cola, the world's largest beverage producer, and its two bottling partners, COFCO and Swire, held a signing ceremony for the restructuring of the bottling business in China. This means that the three parties have reached a final agreement, and COFCO and Swire will acquire Coca-Cola Bottling Investments Group's bottling business in China. In fact, as early as February this year, Coca-Cola's Chairman and CEO Muhtar Kent expressed his intention to "redistribute" the bottling business territory in China. "We are committed to 100% refranchising the company's bottling territories globally," Kent said. In China, Coca-Cola's bottling system has developed to the point of refranchising, meaning that instead of Coca-Cola itself acting as bottler for one-third of its China business, it will only franchise the two bottling partners, COFCO and Swire, to operate. Public information shows that previously, Coca-Cola's main bottling partners in China included three: Swire Beverages Limited, COFCO Coca-Cola Beverages Limited, and Coca-Cola China Industries Limited. Among them, China Foods under COFCO held 65% of the equity of COFCO Coca-Cola. What does Coca-Cola intend to do? In recent years, in addition to the reform of the bottling business, Coca-Cola has also experimented with "lyrics bottles" and "nickname bottles" on product packaging, which industry insiders attribute to weak operating profits. According to Coca-Cola's financial report, in the first half of 2016, Coca-Cola's total revenue was $21.821 billion, a year-on-year decline of 4.6%. The decline in Coca-Cola's sales was mainly dragged down by the Asia-Pacific region, especially the Chinese market; the unsatisfactory sales in the Chinese market dragged down Coca-Cola's performance in the entire Asian market. According to an interview with Coca-Cola's Chief Operating Officer James Quincey by CNBC, Coca-Cola will take some measures to save the Chinese market: it plans to go down to lower-tier channels, launch cheap mid-to-low-end products for the rural market; provide more incentives for distributors; and launch high-end products in first- and second-tier cities with strong consumption power. Coca-Cola has also taken measures to divest its bottling business to "reduce the burden" on its China operations. According to media reports, Coca-Cola earlier estimated that after disposing of assets in North America, China, Germany, and South Africa, its direct employee count would drop from 123,000 to 39,000, net revenue would drop from $44.3 billion to $28.5 billion, but capital expenditure would also be halved to $1.3 billion. Zhu Danpeng, a researcher at the China Food Business Research Institute, said that the sluggish growth of carbonated drinks has also contributed to a series of changes in Coca-Cola's bottling business, including the divestiture of the bottling business. It is reported that in the carbonated beverage industry chain, the gross profit margin is higher in the upstream concentrate production and sales, as high as 50% to 60%; the downstream channel link is about 40% or more; while the midstream bottling business has a lower gross profit margin, only 10% to 15%. Industry experts believe that carbonated drinks have now entered a bottleneck period, and in the future, the two giants Coca-Cola and PepsiCo will continue to extend their product categories and undergo diversified transformation. "Coca-Cola's divestiture of the bottling business is to enhance the company's profitability," Zhu Danpeng admitted. On the one hand, it simplifies the organizational structure; on the other hand, it focuses on categories that require greater market investment, and franchising the bottling business to COFCO Group and Swire Group can also bring some non-operating income and profits. This article is compiled and published by References: Xiaoshidai, International Finance News, etc. -END- The best FMCG distributor learning platform in China Focusing on providing professional, practical, and actionable tutorials for companies and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get the corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent article selection | 002 Distributor market operations | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales improvement techniques | 006 Channel expansion | 007 Managing distributors | 008 Distributor development | 009 Distributor internal operations management | 010 Team management | 011 Efficient distribution techniques | 012 Sales manager's eighteen skills | 013 KA operation methods and strategies | 014 First lesson for new salespeople | 015 Internet, brands | 016 Distributor B2B transformation | [Long press QR code to follow]