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08-Jul-2017 12:07

Rise of the Anchor Bottler Beginning in the 1980s, Coca-Cola's management sought to change the relation it had with its bottling partners in order to extract more value from the chain.At that time, its bottling system was almost a century old and seriously ill-equipped for modern economic times.The term Coke System is oftentimes used to refer to the network of companies involved in Coke's soft drinks value chain.

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In the 1990s, there was a period when that actually happened, and which led to a revolt amongst the company's bottlers.

If this happens, the company's bottlers could see their margins squeezed.

An important way Coke has sought to avoid such a conflict of interest within the Coke system has been through the incidence-based pricing model, under which concentrate prices are dependent, in part, upon bottler pricing, channel mix and packaging mix.

The latest change in Coke's system surfaced last week, when the North American refranchising effort witnessed an unexpected development. The core of Coke's operations consists of manufacturing syrup concentrates, which are sold to bottling partners.

The Coke System is a term oftentimes used to describe the network of companies engaged in Coca-Cola's value chain. The more than 250 Coca-Cola bottlers present in the Coke system add water, carbonation and packaging to turn it into a consumer product.

In its essence the Coca-Cola Company is, therefore, primarily a marketing machine whose foremost job it is to create consumer demand.

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