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Coca-Cola Beverages Florida: ‘It's about the brand'
Circling back around
Meanwhile, consumer preferences and the competitive landscape were changing. Soft drinks came under fire for contributing to obesity, and Coke, like other beverage companies, responded with lines of waters, teas and other low-calorie beverages.
As the number of brands grew, it became harder for Coca-Cola Enterprises to control its manufacturing and marketing costs. In 2010, Coca-Cola bought the North American territories controlled by Coca-Cola Enterprises with a plan to reorganize and manage them under the parent company’s banner.
But just three years after that $12-billion transaction, the company reversed course. Believing that local, independent franchisees could best push sales in local markets, Coke is now returning to its roots — refranchising the territory it had been managing itself. The company expects to complete that process by the end of 2017.
One aim of the refranchising is to align Coke’s territories with those of big national customers like Walmart and regional giants like Publix. And much of the refranchised territory has gone to wellestablished big distributors like United, Consolidated and Swire.
But there were other interested parties.
Taylor and Goins had — on separate tracks — become intimate with the company’s operations. And they had developed similar aspirations.
Goins, a Chicago native with a finance degree from Morehouse and an MBA from Prairie View A&M, held executive positions at several national firms before moving to Coke. He worked there for 12 years in various finance, planning, customer management and marketing roles before becoming vice president for sales operations in Ohio and Kentucky, where he managed all sales and operations for the region.
Goins loved the company but realized he wanted the kind of control that could only come if he were a bottler. “You run up against things where you say, ‘I can do this better,’ but maybe you only get to do six of the 10 things I could think of to do,” he says.
Taylor grew up in Lafayette, La., and earned a finance and business law degree from Marshall University, where he played guard on the basketball team. He had worked in finance for a number of banks, including Accenture, Bank One and J. P. Morgan. His first taste of the Coke system, he says, was working on deals involving independent bottlers who later sold their franchises to Coca-Cola Enterprises.
After leaving banking, Taylor founded a private investment and advisory firm in Houston and had worked as a consultant to Coca-Cola and Coca-Cola Enterprises just before it sold its North America operations to Coca-Cola in 2010. Over the years, he developed relationships with key Coca-Cola executives like Gary Fayard, the company’s now-retired CFO, J. Alexander “Sandy” Douglas, president of Coca-Cola North America, and Muhtar Kent, the company’s current chairman and CEO.
Taylor and Goins met five years ago. Goins says that when he expressed an interest in becoming a bottler, he was told, “ ‘You can do it, but you need somebody with some money.’ I was matched with Troy.”
They say they hit it off immediately. “We were both in long-term marriages, had kids, had the same values and a similar upbringing,” Goins says.
The two began to put together a management and operations plan for a new franchise bottler. Aiming for a marquee territory, they decided to pursue the Florida territory and operations because of the growth and expansion opportunity they saw in the state.
There is no formal process or auction in applying to become a Coke bottler, Taylor explains. Because of its longevity, the company picks its bottling partners with an eye toward doing business for generations and looks for business partners who can show a “keen understanding of the business, the consumer products industry in general and, most important, the symbiotic relationship between the Coca- Cola Co. And its bottling partners,” he says.
“The most important thing for the Coca- Cola Co. Is choosing its partners wisely. It’s a long-term courtship,” Taylor says. “It’s a matter of proving that you will be a good shepherd of the brand.”
In considering prospective bottlers, Taylor says, the company also looks for quietly effective managers who won’t put their personal brands or visibility ahead of the company’s. It’s no accident, he says, that the first two words in the name of almost all the company’s independent bottlers are “Coca-Cola” — an indication that Coke’s brand, not the franchise owner, is paramount.
In the course of pursuing a franchise, Taylor and Goins met numerous times with groups of Coca-Cola executives to cement relationships and build confidence in their ability to operate and grow a bottler and market the company’s numerous products.
At least 10 other aspiring bottlers, including at least one of the big independent distributors, were interested in acquiring the Florida territory. The process, Taylor says, was “complicated and delicate.”
In February 2014, the company announced it would sell the franchise territory in central Florida to Taylor. The deal closed in May 2015, and Coca-Cola Beverages Florida began operations that month. When initial operations went well, Coca-Cola agreed to sell the franchise rights and operations in north and south Florida to Coca-Cola Beverages Florida as well. When the latter two deals close, CCBF’s franchise territory will encompass more than 18 million of Florida’s 20 million residents.
In April of this year, Coca-Cola Beverages Florida announced it will also acquire four production facilities in Florida — bottling plants in Hollywood, Jacksonville, Orlando and Tampa.
Ian Gordon, a research analyst at Bernstein, an investment research and management firm, says those deals are typical of the refranchising transactions: Franchisees buy local physical assets — trucks, warehouses, office space and production facilities. Simultaneously, they enter into a “comprehensive bottling agreement” — essentially, the licensing fee/distribution rights — in which they promise to pay a percentage of their quarterly gross profits to Coca-Cola.
Taylor will not disclose how much he paid for the operations. Filings from Coca- Cola don’t indicate the value of specific franchise deals. He says the acquisitions were financed through his family money and bank loans.
Gordon says Swire paid about $240 million in cash upfront for additional franchise territory in Arizona that includes about 6 million people and two production facilities. Given the size of the Florida territory and the four production facilities, “I suppose it’s conceivable that CCBF is paying two times or more this amount,” Gordon says.
