Coke Shakes Up L.A. Bottling Unit--and Area’s Soft-Drink Industry as Well
A Miami management team dispatched by Coca-Cola’s big new Atlanta bottling conglomerate has shaken up Coke’s bottling operation in Los Angeles and set off a price war.
In an apparent effort to stimulate lagging sales in Southern California and boost profits for the bottling conglomerate, they have reassigned the local president and other top personnel and fired at least two dozen workers.
“It was like Miami Vice,” observed Robert Strock, former marketing director of Coca-Cola Bottling Co. of Los Angeles, who retired in January. “Coke sent in all these executives from Florida to L.A., and they cleared everybody out. They’ve cut out all the frills in order to sell on price.”
The moves, which have taken place throughout the summer, have also shaken the soft-drink industry in Southern California, touching off a price war that has driven the wholesale cost of soft drinks down 10% to 20% from a year ago, industry officials say.
In response, competitors have been forced to reduce their staffs and step up their own sales efforts. “Price competition has accelerated over the last several months,” agreed Sheldon Roesch, marketing director for the Pepsi-Cola Bottling Co. in Orange. “You can’t let prices get any significantly lower than this.”
The big changes at Coca-Cola Bottling Co. of Los Angeles (CCLA) follow its acquisition by Coca-Cola Enterprises, the bottling conglomerate formed by Coca-Cola, which paid $2.4 billion in 1986 to buy CCLA and Chattanooga, Tenn.-based JTL Corp.
Because CCLA operates in fast-growing western markets and bottles more than 50 kinds of soft drinks, including Canada Dry, Sunkist, Schweppes and Dr. Pepper, it is considered by many analysts to be the key bottler in Coca-Cola Enterprises’ quest for greater profits.
“Coke looks at the Los Angeles market and salivates,” said Emanuel Goldman, a beverage analyst for Montgomery Securities in San Francisco. “Pepsi has a larger share than Coke in Los Angeles. It’s a market that Coke feels it should be doing better in. It is a market that Coke Enterprises sees substantial potential in.”
Although Coca-Cola bottling officials in Los Angeles say only about 1% of its estimated 3,000-person work force has been laid off, there has been a substantial reduction in key departments.
What’s more, several top executives have been reassigned or fired, including executives in charge of marketing, sales and public relations. Bill Adams, who oversaw Coke’s vast western bottling operations as president of CCLA, now oversees bottling operations in San Diego.
Replacing them is a new Florida management team, led by Larry Smith, a graying, bespectacled soft-drink executive who was president of Coca-Cola Bottling Co. of Miami before he replaced Adams.
Smith’s title is president of Coca-Cola Enterprises/West, which includes CCLA as its biggest subsidiary.
“The biggest reason for the cutbacks is that we’ve integrated many operations into one (smaller) system,” said C. E. “Buddy” Rogers, CCE-West’s new vice president of corporate affairs, who is also from Miami. “We can decrease our costs and simultaneously improve operations.”
It was Rogers who said the firings amounted to 1% of the firm’s employees at the Los Angles headquarters. He first refused to disclose a specific number, characterizing it as “extremely small.” Later, he said he wouldn’t object to the two-dozen figure.
An official of Coca-Cola Enterprises in Atlanta said a “sizeable number,” or 3%-4% of its 21,000 work force nationwide, has been laid off in the last nine months.
And two former CCLA officials, who did not want to be identified, estimated that the number of people let go at CCE-West has been between 40 and 70 in the last four months.
“One of the purposes of bringing these (bottling) companies together was to gain some economies of scale,” said Jean Michel Bock, assistant to the president of Coca-Cola Enterprises. “There were a lot of functions which were redundant.”
COKE IN LOS ANGELES
Coca-Cola was introduced to Los Angeles in 1902 when A. T. Gantt signed an exclusive franchise to provide Coke within 50 miles of City Hall. That year, Coca-Cola Bottling Works in Los Angeles produced 750 gallons of Coke and sold 92,000 bottles from a horse-drawn wagon.
Today, officials say machines produce that much Coca-Cola in 15 minutes. And the Los Angeles franchise is owned by giant Coca-Cola Enterprises, a national bottling company set up Coca-Cola in 1986.
Los Angeles is now the Western U.S. headquarters of Coca-Cola Enterprises. From the downtown office of Coca-Cola Bottling Co. of Los Angeles, the company oversees bottling operations in much of California, Oregon, Washington, Arizona, Colorado, Kansas and Hawaii.
The unique facade on the company’s downtown headquarters at 1134 S. Central Ave. was declared a cultural historic and cultural monument in 1976. Its Streamline Moderne style was designed in the 1930s by architect Robert Vincent Derrah to resemble a ship, complete with porthole-like windows.
