The Coca-Cola Company announced in a press release the formation of a new National Product Supply System in the U.S. to facilitate optimal operations of the Coca-Cola bottlers in the country.
The company will also be selling nine of its own production facilities to independent producing bottlers.
Coca-Cola said in the press release that the goal of the new supply system is to achieve the "lowest optimal manufactured and delivered cost" for all of Coca-Cola's bottlers and to enable investments to build sustainable capability and competitive advantage.
The new supply system will also be prioritizing quality, service and innovation to exceed the requirements of customers and consumers.
Muhtar Kent, chairman and CEO of Coca-Cola, said in the press release that formation of the National Product Supply System will "enable profitable growth for our entire U.S. system."
"We will leverage the strengths and capabilities of the four largest producing bottlers in our U.S. system, CCR, Consolidated, United and Swire to operate as one highly aligned and highly competitive national product supply system," he said.
The new members of the National Product Supply System will include Coca-Cola Bottling Co. Consolidated, Coca-Cola Bottling Company United, and Swire Coca-Cola USA, the company's three independent producing bottlers, according to the press release.
Coca-Cola Refreshments and Coca-Cola North America will also be members of the new supply system.
The company also said in the press release that it is divesting nine production facilities of Coca-Cola Refreshments, which has an estimated book value of $380 million, to its three independent producing bottlers.
Coca-Cola Consolidated will be acquiring six of the nine production facilities while Coca-Cola Swire will acquire two and Coca-Cola United will be acquiring one.
Reuters adds that Coca-Cola has been selling its bottling operations to franchisees as the company shits away from the business of distribution.
The world's largest soda maker has been facing sluggish sales volume in the U.S.
Coca-Cola, though, has never sold any of its production facilities, where its concentrate is combined with other ingredients and bottled up, according to Reuters.
Bonnie Herzog, an analyst at Wells Fargo, told Reuters that they are expecting Coca-Cola to generate a high return on invested capital.
"By selling production facilities, we expect (Coke) will generate a higher return on invested capital as its capital base is reduced, and have incremental cash to reinvest and return to shareholders," Herzog said.
The company said in the press release that it expects the sale of its production facilities to take place between 2016 and 2018.
