The Coca-Cola Company (NYSE:KO) corking operations at Sacramento plant
The Coca-Cola Company (NYSE:KO) says it will be shuttering its Sacramento bottling and distribution facility that it had bought just a couple of months ago. General Manager of the business in Sacramento, David Torridge, says the 60-employee unit located on Stockton Boulevard will shutdown at a date that has not yet been confirmed and that the decision had been a difficult one. It was reported that the Sellers family requested the Coke parent company to buy Sacramento Coca-Cola Co. in January. The family has been the owner of the business since it’s incept in 1927.
However, soon after the acquisition, KO realized that the unit has an excess capacity which the company did not need. The facility can produce around 9M cases of product on an annual basis. Officials have stated that this shutdown will not affect the administrative and distribution offices in Natomas, which is nearby or the Modesto distribution site operations. When it had first opened doors in 1936, the facility had provided the badly-required jobs and those who live in the area or have worked at the plant were shocked with the news.
Game plan change…
Around mid-April there was a lot of news around the fact that The Coca-Cola Company (NYSE:KO) was starting to sell off all its distribution even before three years were out and billions of dollars had been spent. The bottle and can delivery business is a capital intensive and low-return one. Getting out of it is the company’s way of improving its margins. It was in 2010 that Coke had acquired its North American bottling operations. The idea then had been to cut costs, speed up innovation and turnaround a declining market where health-conscious consumers have been on a “drink less soda” trend.
The company has said that it will soon be moving to a franchise model in the U.S. Independent companies will deliver drinks to all local stores, though Coke plans on continuing with producing them. A change in market demands means that companies have to be able to adjust and modify their strategies, be they around manufacturing, marketing, sales or distribution. By the looks of it, The Coca-Cola Company (NYSE:KO)’s lesson has been an expensive one.