11 June 2009 - Commenting on PepsiCo's plans to acquire the Pepsi Bottling Group and consequently cut costs, Coca-Cola Company CFO, Gary Fayard, argued that his company's current franchise structure is generating good results and is in no need of changing its strategy by acquiring bottlers.
“We are very comfortable where we are and we think we have a winning strategy”, stated Fayard at an investor conference in Paris earlier this week.
He admitted that PepsiCo will benefit from cost savings and synergies by buying Pepsi Bottling Group as it intends to do. However, quoting numbers, Fayard said that his company, with 150 million, is close to the 200 million that PepsiCo indicated as being the synergy number.
|
“We’ve already announced 150 million last year of just working with our bottlers in supply chain and logistics in freight only. So if 200 is really the number, I would suggest to you I can beat that number and I don’t need to buy the bottlers. If Pepsi Bottling Group’s rise is 800 million, I’d say we could probably get 70-80% of that and don’t need to buy them and still operate in a franchise environment”, commented the CFO.
Fayard stressed the fact that PepsiCo and the Coca-Cola Company are very different companies with different strategies and growth models. However, he did argue that Coca-Cola’s constructive tension with its bottlers has actually led to better results, which has translated into extra gains in the global market place in the last several years.
The CFO also told the audience that the Coca-Cola Company is now the largest juice company in North America, which is a very competitive market. |
Gary P. Fayard
Executive Vice President & Chief Financial Officer
The Coca-Cola Company
|
“Between Minute Maid and Simply, we are bigger than Tropicana and growing faster. And in the first quarter, VitaminWater, which is pushing back Gatorade into the sports category, grew double digits and will continue to grow double digits we believe. Besides, PowerAde grew 28%, whereas Gatorade was negative in Q1”, said Fayard.
Fayard then added: “We think that our strategy of squeezing them in the middle, not only in sports beverages, but also in juices is working”.