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VCGuy
Believe me, it’s not... • 1m
I was always curious why Coca-Cola doesn’t own its bottling infrastructure. They run a franchise bottling model- ⤷ It sells concentrate syrup to bottling partners, who handle manufacturing, packaging, logistics, and distribution. The parent company focuses on brand + marketing → bottlers invest in capex-heavy infrastructure. ⤷ Coca-Cola’s avg Return on Capital: ~30% ⤷ Bottlers operate at ~10–12% (rare established bottle operators could be making higher teens) (managing a global brand and managing bottling are fundamentally different businesses) What initially started as a workaround became a core advantage - a). Bottlers bring deep regional knowledge → pack sizes, pricing, and delivery models vary by market b). Local execution allows innovation without compromising brand consistency c). The global network stays aligned through long-term franchise agreements d). Coke avoids asset-heavy operations while retaining control over marketing + product standards Outsourcing the low-return part of the business while owning the high-return brand machine. ⏭️Founded in 1886, Coca-Cola serves 2.2 billion drinks/day ⇨ present in every country except North Korea and Cuba.
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