Coca Cola India is set to acquire two more bottling companies from its franchisee bottlers through its wholly owned bottling subsidiary. The move is part of Atlanta-based soft drink major's plan to directly get into distribution via acquisition of its bottlers.
The two bottlers are Orient Beverages and Jai Hind Bottlers. While the former is the Coke bottler for Patna in Bihar, the latter is the Kanpur bottler of the MNC.
Sources said the two bottlers are in an advanced stage of negotiation to sell out their companies to Coca Cola India.
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"Coca Cola India has invited all its bottlers to be joint venture partners. Our bottlers in Hyderabad and Secunderabad have already become our joint venture partners. The bottlers in Patna and Kanpur were given the same terms, but they have preferred to sell out," said Donald Short, chief executive officer, Coca Cola India.
The bid to acquire Orient Beverages and Jai Hind Bottlers comes close on the heels of Coke's earlier buy-out of Annapurna Industries, its Thiruvananthapuram bottler, and Prabha Beverages, the soft drinks bottler for Kurnool in Andhra Pradesh. Besides the acquisition of these two companies, Coke is also negotiating with Ramesh Chauhan to buy out his bottling company, which has the manufacturing and distribution rights for the soft drinks in the Delhi region. It is believed to have approached other bottlers, offering to buy out part equity in theirfirms and forming venture partnership with them. Coke had entered into a JV agreement with 2 bottling firms --Spectra and Hyderabad Bottling -- last April. Both were for the territory of Hyderabad and have already been merged into the Coca Cola bottling subsidiary.
Coca Cola India has already announced its intention to directly take over bottling operations through its own subsidiaries in order to have a hold on manufacturing and distribution of the soft drinks in India.
The multinational company has already obtained government approval to invest $700 million in its operations here. Unlike its rival Pepsico, whose bottling operations are primarily under the parent company, Coke has set up 100 per cent subsidiaries to look after the bottling operations.
The government had earlier ruled that the bottling subsidiaries of Coke could act as holding companies and set up firms for downstream activities, but on the condition that Coke would have to divest up to 51 per cent equity in these companies within five years.