Coca-Cola BY TREVOR HARRIS* , IRA WEISS , AND AMIR ZIV Introduction The Coca-Cola Companys (KO) primary source of revenue is the concentrate it supplies to its many bottlers. Since the variable costs of producing concentrate are low, KOs revenue and profit growth are enhanced by increased volume. The KO system has consolidated its bottling operations into a small number of anchor bottlers, which operate in different geographical regions. The largest of these bottlers is Coca-Cola Enterprises (CCE), which dominates the U.S. as well as several European markets (see Exhibit 1 for profit-margin trends for KO and its leading bottlers, 1983-1998). Working with Bottlers The supply-chain paradigm in the soft-drink industry involves multiple corporate entities linked by carefully worded operating agreements. KO produces concentrated syrups that are sold to a network of bottlers. These bottlers then mix the beverages and package them in a variety of sizes. Since 1980 bottlers have enjoyed exclusive rights in their defined territories, 1 enabling KO to strengthen its control over the means of distribution and access to the consumer by buying up independent bottlers (who were willing, in the past, to defect to a rival soft drink manufacturer if the latter offered them a