Coke names new head of bottling arm

At a time when it is waging an increasingly heated market-share battle with private label manufacturers, Coca-Cola Beverages, the bottling arm of Toronto-based Coca-Cola, has announced a change at the helm.Neville Kirchmann, who has been Coca-Cola Beverages' president and chief executive...

At a time when it is waging an increasingly heated market-share battle with private label manufacturers, Coca-Cola Beverages, the bottling arm of Toronto-based Coca-Cola, has announced a change at the helm.

Neville Kirchmann, who has been Coca-Cola Beverages’ president and chief executive officer since the company’s formation in 1987, has accepted a yet-to-be-announced position with one of Atlanta-based Coca-Cola’s overseas divisions.

William P. Casey, a Coca-Cola employee in the u.s. for the last 25 years, primarily on the bottling side, has been named as Kirchmann’s replacement.

For the last seven years, Casey has been executive vice-president, bottler operations for Coca-Cola USA in Atlanta.

Before that, he spent seven years as president of New England Bottling. And from 1973-78, he was an executive with Coca-Cola’s Michigan bottling operations.

Casey will have to be prepared for some tough decision-making if he hopes to revive Coca-Cola Beverages’ fortunes in Canada.

Terry Brennan, Coca-Cola Beverages’ senior vice-president and chief financial officer, says the company lost $9.5 million in the first six months of this year.

During the same period in 1991, the company reported a profit of $10 million.

Cut prices

Brennan says the loss resulted from a Ccoa-Cola Beverages decision last December to cut its prices by 10%, adding ‘we did that in an effort to lower the price premium between our brands and private label.’

A combination of the slow economy, wide-spread retailer price wars and low consumer-confidence levels have enabled private label brands to pick up unprecedented momentum in the marketplace.

Brennan says in-house studies by Coca-Cola Beverages have shown the aggressive pricing has been effective in dampening, though not arresting, private label growth.

‘We’ve seen some slowing in private label growth as a consequence of our pricing strategy,’ he says.

Unrelated

Brennan says the departure of Kirchmann, a South African by birth who spent 12 years as president of Toronto-based Coca-Cola before becoming the head of Coca-Cola Beverages, is unrelated to the Coca-Cola Beverages’ recent losses.

This is supported by the rumors that have circulated for about two years that Kirchmann would move overseas as soon as an appropriate post became available.

(Apparently, Kirchmann’s appointment has set off a series of moves in Coca-Cola upper ranks, so his new post is being kept a secret until all the arrangements have been put in place.)

Still, a week before announcing the leadership change, Coca-Cola Beverages moved to stem the flow of red ink by raising its prices 3% to 4%.

The company is also hoping to increase its profits with an aggressive new merchandising program.

As Coca-Cola’s bottling arm, it is responsible for manufacturing, selling, distributing, pricing and merchandising Coca-Cola products in Canada.

Coca-Cola, which owns 49% of Coca-Cola Beverages, is responsible for brand marketing.

Brennan says Coca-Cola cut back on its brand activity at the beginning of the year and the funds are being used by Coca-Cola Beverages to put ‘a significant extra effort into merchandising.’