Coca-Cola Co. will be undergoing a shakeup in its operating procedure, as it announced it is splitting its North American business into two units over the weekend.
The LA Times reported on Friday that the split is aimed at returning the company, which is based in Atlanta, to a "traditional franchise model." Beginning on New Year's Day, two separate entities known as Coca-Cola North America and Coca-Cola Refreshments, which will handle the bottling procedures, will be formed.
By returning to such a structure, the company will once again operate under a business model in which the soda concentrate manufacturer and the bottler are separate entities.
"We are in a position to leverage this flexibility to return to a traditional company and bottling operating model in North America," Coca-Cola chief executive Muhtar Kent said. He then went on to say that the strategy will "enhance our focus on execution and accelerate the refranchising of our bottling system in our flagship market.”
The news also comes as part of Coca-Cola's attempt to revamp the company amid declining soda sales and more attention from consumers on the less fizzy stuff. This year, Coca-Cola's stock gained only 8.7%, compared with Pepsi's 18%.
In addition to introducing more non-soda drinks to mitigate the concern, Kent said in his statement that the North American split would also allow the company to "intensify focus on key markets, streamline reporting lines and provide flexibility to adjust the business within these geographies in the future."