Coca-Cola largest customer of the company accounting for

Coca-Cola Bottling is the
largest independent Coca-Cola bottler in the US, producing, marketing and
distributing non-alcoholic beverages, that are mostly products of The Coca-Cola
Company. The company has its operations in North Carolina, South Carolina, West
Virginia, Virginia, Alabama, Mississippi, Tennessee, Kentucky, Georgia and
Florida. Coca-Cola Bottling holds a Cola beverage agreements and other agreements,
so they can produce, distribute and market sparkling beverages of The Coca-Cola
Company in certain regions. The company also holds a still beverage agreements,
where they distribute and market beverages of The Coca Cola Company. The
company, through its strong regional presence and various manufacturing and
distribution agreements, established itself as a strong market player. Coca-Cola Bottling had strong
growth in terms of revenues and profits in fiscal year 2015. The company’s
revenues grew by 32.1% in fiscal year 2015 over fiscal year 2014. The increase
in revenues was caused by a 6% increase in bottle/can volume to retail
customers. Products, and still beverages had a 4.9% increase in bottle/can
sales price per unit to retail. An increase in external transportation revenue
had a 7.6% jump in sales volume to other Coca-Cola bottlers. And a 3.4%
increase in post-mix sales price per unit. Also, in fiscal year 2015, the
operating profit and net profit of the company grew by 14.1% and 87.9%. Coca-Cola Bottling relies on
a small number of customers for a significant portion of its total sales. The
company’s major customers are Wal-Mart and Food Lion. Wal-Mart is the largest
customer of the company accounting for nearly 22% of its total bottle/can
volume to retail customers and Food Lion is the second largest customer
accounting for about 7% of the company’s total bottle/can volume to retail
customers. In fiscal year 2015, Wal-Mart and Food Lion accounted for
approximately 15% and 5% of the company’s total net sales. These customers make
purchase decisions based on a combination of price, product quality, consumer
demand and customer service performance and generally do not enter into
long-term contracts. The loss of one or both of these customers could affect
the sales volumes and results of operations of the company. Growing awareness among consumers about health
issues has increased the demand for healthy drinks like tea in the recent
times. According to an industry sources, tea is the most widely consumed
beverage in the world after water. It was found that tea is in more than 75% of
the US households. In 2015, Americans consumed more than 79 billion servings of
tea. US. Coca-Cola Bottling offers a wide range of teas, including green tea,
herbal tea, caffeinated/decaffeinated tea, sweet tea, instant tea,
ready-to-drink tea and iced tea, among others. Therefore, with the growing
attention to health benefits of tea, the company can increase its sales.  Functional drinks which
includes energy drinks, sport drinks and nutraceutical drinks has been growing.

The US functional drinks market grew by 7.8% in 2014 to reach a value of $29.2
billion. Energy drinks were the largest segment of the functional drinks market
in the US, accounting for 63.4% of the market’s total value. Coca-Cola Bottling
has been distributing certain Monster brand energy drink products since 2007.

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Therefore, the company is well positioned to tap the growing energy drinks and
shots market. The non-alcoholic beverage
industry is highly competitive. The competitors of the company include bottlers
and distributors of nationally and regionally advertised and marketed products
and bottlers and distributors of private label beverages in supermarket stores.

Their key competitors include PepsiCo, Cott Corporation, National Beverage and
Buffalo Rock Company. Due to the intense competition, the company may be forced
to increase its spending on advertising and promotions or reduce prices which
may lead to reduced profits that could affect growth. The company’s business
operations are subject to the rules and regulations of the Food and Drug
Administration (FDA) and other federal, state and local health agencies
regarding production and marketing of beverages. The FDA also regulates the
labeling of containers. In 2014, the FDA proposed new rules, which could result
in major changes to nutrition labels on all food packages, including the
packaging for the company’s products. In addition, health advocates and dietary
guidelines are encouraging consumers to reduce the consumption of sugar,
including sugar sparkling beverages. With customers moving away from the
consumption of sweetened beverages, the company is likely to have a decrease in
the demand for its products which could, in turn, negatively impact its profit
margins.  Labor costs are rising
significantly in the US. The federal minimum wage rate in the US, which
remained at $5.15 per hour since 1998, increased to $5.85 per hour in 2008. It
further increased to $6.55 per hour in 2009 and to $7.25 per hour in 2010. Furthermore,
in many states have minimum wage rates even higher than $7.25 per hour due to
higher cost of living. The minimum wage rate has increased in the states of
Delaware (from $7.75 in 2014 to $8.25 in 2015) and West Virginia (from $8 in
2015 to $8.75 in 2016). Rising labor costs can increase the company’s operating
cost and affect its margins.

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