Updated 6 yearss ago
Troy Taylor is acquiring the rights to the sales, manufacturing and distribution of Coke products for most of Florida.
In the mid-1990s, Troy Taylor was working as part of a team of investment bankers advising Miami entrepreneur Carlos de la Cruz as he went about buying the bottling and distribution operations of Coca- Cola in Puerto Rico from Bacardi, Coke’s bottling franchisee there at the time. De la Cruz was an important client — he owned Anheuser-Busch distributor Eagle Brands in Miami, three south Florida car dealerships and other businesses. And the Puerto Rican franchise was a big prize.
One of the largest concentrations of Coca-Cola employees outside of Atlanta is in Tampa Bay, including some 124 at the Tampa Coke production facility, which is being acquired by Coca-Cola Beverages Florida. It operates seven days a week and manufactures 21 million cases a year of waters and carbonated beverages.
Taylor understood well that the sale of a Coke bottling franchise wasn’t an everyday transaction — “rarer than the sale of a major sports franchise,” he says.
Taylor had an additional incentive to help the deal succeed and to study it closely. As he confided to de la Cruz on a plane trip, he, too, had ambitions of becoming a Coke bottler.
De la Cruz’s reaction? “I was told I’d have to be very patient,” Taylor says.
For about 20 years, as it turned out.
Less than two years ago, Taylor founded Coca-Cola Beverages Florida, where he’s now chairman and CEO. Reginald Goins, an 18-plus year veteran of the Coca- Cola system, is the company’s president and COO.
By the end of 2017, the franchise will control the production, sales and distribution of Coca-Cola products — more than 750 beverages — in all of Florida east and south of the Tallahassee area. The company expects to have more than $1 billion in revenue and employ more than 5,000 workers at 16 sales and distribution centers and four bottling plants throughout the state — making it the fifth-largest independent U.S. bottler and the third-largest privately held bottler in the U.S. That level of revenue will place it among the top 55 largest privately owned firms in Florida.
Taylor’s company is the first new Coca- Cola bottler/distributor created from scratch in nearly 60 years — Coke has never owned all of its manufacturing and distribution facilities — and the second African- American-onwed bottler in the U.S.
Invented in 1886 by an Atlanta pharmacist who concocted a formula for a sweet syrup, Coca-Cola initially was sold only at soda fountains, which bought the syrup from the company and mixed it with carbonated water onsite.
In 1899, two Tennessee attorneys approached Asa Candler, who had acquired the formula from the pharmacist, about purchasing the rights to bottle the drink. In what has to rank as one of the most curious decisions in U.S. corporate history, Candler — believing Coke would always be a fountain drink — sold bottling rights for almost the entire U.S. to the men for $1.
The Tennessee lawyers promptly carved the U.S. into territories and began reselling bottling rights to local entrepreneurs, who manufactured Coke using syrup purchased from the parent company, bottled it and sold it to stores.
By 1920, there were more than 1,000 Coke bottlers in the U.S., and the proliferation served growth well — that year, sales of bottled Coke overtook fountain sales.
But as Coke’s popularity grew and the company added brands like Sprite and Tab, the parent company moved to get more control over the manufacturing and distribution of its beverages. In the 1970s, it began encouraging and funding the consolidation of local bottlers into larger businesses. And over time, a handful of large, independently owned distributors emerged, including Birmingham-based Coca-Cola Bottling Co. United; Swire Coca-Cola, now part of a Hong Kong-based conglomerate; and Coca-Cola Bottling Co. Consolidated, a publicly traded company based in Charlotte, N. C., that’s now the largest independent Coke bottler in the U.S.
By the 1980s, however, bottling rights for most of the U.S. still remained in the hands of smaller bottlers like the Aide family in Tarpon Springs, which had owned a Coke bottling plant and a distributorship since 1916.
To push consolidation further, Coca-Cola began buying up those operations, eventually bundling them into a separate, publicly traded corporation called Coca-Cola Enterprises, which became the largest independent Coca-Cola bottler. The Aides, one of 58 independent Coke distributors in Florida in 1958, were the last in Florida to sell to CCE, holding out until 2001.
Coca-Cola Enterprises streamlined the manufacturing and distribution process to a degree but sometimes lost touch with local markets. One example: If the local Coca-Cola Enterprises-owned distributor in Tampa wanted marketing money to sponsor an event like the annual Strawberry Festival in Plant City, he had to get approval from a CCE executive in Atlanta. That executive might not realize the importance of that particular marketing opportunity. Sometimes, delays and bad decisions hurt relationships between local distributors and local vendors — and sales.
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.
Initially, Taylor says, his biggest challenges were in getting the company’s administrative infrastructure — IT, human resources, etc. — up to speed. He’s filled his new company’s senior management ranks with experienced former Coca-Cola executives and associates he worked with in other business ventures.
He’s also sought to reintroduce a family- owned company feel among his firm’s employees, regularly visiting the warehouse and field workers at the company’s sales and distribution centers. “We want people to take ownership” in the company’s success, says Dale Yahrmatter, the company’s vice president of operations, pointing to forklifts now inscribed with employees’ names.
While Coke bottlers make money servicing big national clients, their highest margins come by driving sales at smaller, Main Street-type businesses. In his central Florida territory, Taylor has beefed up his company’s profile through various community events and initiatives — speaking engagements, donations and sponsorships for groups like Boys and Girls Clubs and events like coastal cleanup efforts. He’ll bring that approach throughout the state, he says, to emphasize Coca-Cola’s connection to local communities.
Yahrmatter cites one initiative undertaken by the company that was problematic under Coca-Cola Enterprises’ corporate management. “We had a float in the Lakeland Christmas parade; we couldn’t do that before,” he says.
As he works to build the relationships that enhance Coke’s visibility, Taylor also faces a challenge in supplying exactly the right products in Florida’s diverse local communities. It’s possible to identify some general preferences among different ethnic groups — Hispanics tend to prefer sweeter carbonated beverages, for example; millennials tend to like flavored teas and waters, he says. But demographics vary from one community to the next. Even in just one convenience store, the clientele may vary so much from the morning to the afternoon, Taylor says, that knowing exactly how to stock the cooler by the cash register isn’t easy.
Ultimately, Taylor says, his success depends on making sure Coca-Cola Beverages Florida sells and delivers the right Coke products in the right places. “It’s about the brand. Coke communicates quality. Our job is to figure out what the local consumer wants and to deliver that on a consistent basis to them.”
Coca-Cola Beverages Florida joins an elite group of big independent bottler/distributors with franchise territories across the U. S. Among the largest:
Coca-Cola Bottling Company United, a privately held firm, controls distribution in seven southeastern states from its headquarters in Birmingham. In Florida, United controls distribution of Coke products from the Tallahassee region west through most of Florida’s Panhandle.
Swire Coca-Cola, part of a Hong Kong firm, sells and distributes Coke products in 13 western states, including Washington, Nebraska, California and Arizona.
Coca-Cola Bottling Company Consolidated, a publicly traded company based in Charlotte, N.C., is the largest independent Coke bottler in the U.S. The firm, which had $1.74 billion in revenue in 2015, controls territory in North and South Carolina and 12 other states, primarily in the southeast but ranging into Indiana and Pennsylvania. Like United, its history as a Coke bottler goes back to 1902. In Florida, Coca- Cola Consolidated controls a small area around Panama City.