Bottlers Reject Coca-Colas Buyout Offer

Rejecting Cokes contention that the bottlers do not have the cash to invest, 34 of the 50-odd bottlers who attended the meeting have instead decided to collectively fork out over Rs 1,000 crore in the next three years to expand and upgrade their bottling plants without any assistance from the multinational.

They also decided to pressure the Atlanta-based company to extend franchise for bottling Coke to eight domestic bottlers who have already made the investments as per the multinationals requirements.

The meeting, held under the aegis of the Coke Bottlers Association, also resolved that all the bottlers will write to the association rejecting the Coke offer, and outline their alternative investment plan. After that, the association will formally take up the matter with the multinationals top bosses in Delhi.

 

Explaining the logic behind the decision, a bottler said: We are 50 bottlers, with each ready to pump in Rs 20 crore in three years, which would upgrade the factories to produce 600 bottlers a minute...then why do we need a joint venture, or sell our units to the multinational.

Another bottler, who attended the meeting, pointed out that Coke had also not granted a franchise to numerous bottlers who now bottle Thums Up even though they have made investments. He said no bottler had refused to make investments, adding that we have the cash

provided Coke is willing to take us with them.

Coke had estimated a capital investment of Rs 4000 crore by the turn of the century to double production capacity, quadruple revenues and raise volume growth three-fold. Of this, Coke and its franchisees have already invested around Rs 700 crore.

The multinational, in its meetings with bottlers in London and Delhi recently, had offered to buy out the bottling units in return for a nominal stake in its two proposed subsidiaries. Coke had offered to divest up to 49 per cent equity in the two subsidiaries, one to be located in the west and the other in the east.