Coca-Cola’s strategy is to own the brands and the concentrate, and let bottling partners own most of the factories and trucks. The company sells concentrates and syrups to independent bottlers, which make, package and distribute the drinks in exclusive territories; when it buys a struggling bottler, it fixes it and then refranchises it. In fiscal 2025 concentrate operations were 59% of net operating revenues but 85% of unit case volume, and the system sold 33.8 billion unit cases in more than 200 countries and territories.
Coca-Cola sells concentrates and syrups to bottling partners, which add water and sweeteners, package the drinks and sell them to retailers. In fiscal 2025 concentrate operations were 59% of net operating revenues and 85% of worldwide unit case volume.
02
Exclusive territories under bottler's agreements
Bottler's agreements authorise each partner to prepare, package, distribute and sell the company's trademark beverages in an identified territory, and require it to buy its concentrate from Coca-Cola or authorised suppliers. Bottlers are independent contractors, not agents.
03
A few big partners
The five largest independent bottlers in 2025 were Coca-Cola FEMSA, Coca-Cola Europacific Partners, Coca-Cola HBC, Arca Continental and Swire Coca-Cola. Together they represented 44% of worldwide unit case volume.
04
Buy, fix, refranchise
In underperforming markets Coca-Cola sometimes takes control of a bottler, held in its Bottling Investments segment, then sells it to an independent bottler to improve system efficiency. That segment's operating margin was 7.4% in fiscal 2025, against 59.1% for Latin America, which is why the company prefers not to own bottlers for long.
What changed in 2025-26
Africa bottling to Coca-Cola HBC
In October 2025 Coca-Cola agreed to sell a portion of its interest in its African bottling operations to Coca-Cola HBC, with closing expected by the end of 2026 and an option for CCHBC to buy the remaining 25% within six years. It recorded a $1,274 million charge as the operations became held for sale.
India refranchised step by step
Coca-Cola refranchised bottling operations in certain Indian territories in January, February and December 2024 and again in May 2025, and in Bangladesh and the Philippines in February 2024. Each sale shrinks the low-margin bottling business it consolidates.
AI and the route to market
The fiscal 2025 10-K warns that e-commerce and comparison shopping could threaten the value of some legacy route-to-market strategies. It says Coca-Cola must keep strengthening marketing, data analytics, including artificial intelligence and machine learning, and innovation.
New chief executive
The 2026 proxy statement says Henrique Braun succeeds James Quincey as CEO effective 31 March 2026, with Quincey continuing as Executive Chairman. Berkshire Hathaway was the largest disclosed holder, with 400,000,000 shares (9.29%) as of 31 December 2025.
Separate the high-margin layer you must own (brand, formula, pricing) from the capital-heavy layer partners can run.
Use exclusive territories to align partners: give them a protected market in return for buying your core input.
Own a weak link only as long as it takes to fix it, then hand it back to a partner and redeploy the capital.
Read Coca-Cola's segments, not just the total: bottling it still owns earns a fraction of the concentrate margin.
Watch how AI-driven shopping changes route to market; distribution moats built on shelf space can weaken.
The Business Engineer lens
Coca-Cola’s edge is a control architecture: it owns the brand and the input every bottler must buy, while partners carry most of the plants, trucks and labour. The Business Engineer reads this as the template for AI platforms too: own the scarce layer, franchise the heavy one.
Own the brands and sell concentrate to independent bottling partners, which make and distribute the drinks in exclusive territories. Coca-Cola buys bottlers only to fix them, then refranchises them.
How does Coca-Cola make money?
Mainly by selling concentrates and syrups (59% of net operating revenues in fiscal 2025) and finished drinks from the bottlers it owns (41%). Net operating revenues were $47,941 million in fiscal 2025.
Who are Coca-Cola's largest bottlers?
In 2025: Coca-Cola FEMSA, Coca-Cola Europacific Partners, Coca-Cola HBC, Arca Continental and Swire Coca-Cola, together 44% of worldwide unit case volume.
What is refranchising?
Selling a company-owned bottling operation to an independent bottler. Coca-Cola did this in parts of India in 2024 and 2025 and agreed in October 2025 to sell part of its African bottling business to Coca-Cola HBC.
The complete explainer, cleaned up and reformatted for mobile.
Last Updated: April 2026
Correction (10 Oct 2026): an earlier section on this page showed unsourced figures; it has been removed.
Coca-Cola’s distribution strategy involves initial investments in bottling partners, transitioning to a franchising model. Exclusivity agreements, marketing investments, and a hybrid approach balance control and independence. As bottling operations stabilize, they’re re-franchised, enabling global expansion with low capital expenditure. This differs from McDonald’s, which emphasizes real estate control in its franchising.
Coca-Cola's business strategy is a global distribution model built on strategic partnerships with independent bottling companies worldwide.
Coca-Cola follows a business strategy (implemented in 2006) where it invests initially in bottling partners’ operations through its operating arm – the Bottling Investment Group.
As they take off, Coca-Cola divests its equity stakes and establishes a franchising model as a long-term growth and distribution strategy.
In 2019, these five bottling partners represented 40 percent of the total unit case volume the company sold.
Coca-Cola has separate agreements with bottling partners for manufacturing and selling the company’s products.
As specified by Coca-Cola,
“The bottler’s agreements generally authorize the bottlers to prepare, package, distribute and sell Company Trademark Beverages in authorized containers in an identified territory. The bottler is obligated to purchase its entire requirement of concentrates or syrups for the designated Company Trademark Beverages from the Company or Company-authorized suppliers.”
Coca-Cola typically agrees to refrain from selling or distributing, or from authorized third parties to sell or distribute, the Company Trademark Beverages throughout the identified territory, to guarantee bottling partner exclusivity under that territory and product.
However, Coca-Cola typically reserves the right to manufacture and distribute its trademarked products and brands.
In exchange, Coca-Cola also participates in its bottling partners’ sales and marketing activities.
For instance, in 2019, Coca-Cola spent $4.4 billion in promotional and marketing programs with bottling partners.
Coca-Cola’s strategy for building, growing, and maintaining its distribution system is pretty fluid.
Indeed, in most cases, Coca-Cola leverages a network of independent bottling partners.
In some cases, Coca-Cola places strategic investments in some bottling partners’ operations.
It does that either to enable entry into a local market by leveraging Coca-Cola’s group resources or to maintain control of the bottling partner.
In the long-term, Coca-Cola will divest its stake as the bottling partner operations take off, thus enabling Coca-Cola to keep its capital requirements low while keeping a minor stake in the bottling partner, thus guaranteeing control and cooperation.
Therefore, the distribution system and the bottling partners are organized as a hybrid approach between chain and franchise.
Where in the short term, Coca-Cola acts as a chain of bottling companies. Long-term, it acts more like franchising, where bottling partners are kept mostly independent yet tied to the Coca-Cola brand.
This mixed distribution system of owned and non-owned bottling partners is the Coca-Cola system which sold 30.3 billion unit cases in 2019.
Re-franchising or “going franchise”
For instance, in 2019, Coca-Cola acquired controlling interests in bottling operations in Zambia, Kenya, and Eswatini.
As those bottling operations will become stable and established over time, Coca-Cola will re-franchise them.
Therefore, it will sell its controlling stake, having a franchisor-franchisee relationship with those bottling partners.
In some cases, it might keep a minor equity stake to keep more control over the operations.
In 2018, for instance, Coca-Cola had a few hundred million in proceeds as it re-franchised its Canadian and Latin American bottling operations.
This is how Coca-Cola keeps its CAPEX low while still keeping control of the bottling operations and enabling expansion and capillary distribution!
This is how Coca-Cola represents its system:
The Coca-Cola distribution system (source: Coca-Cola Company)
While in the directly owned bottling facilities, Coca-Cola sells directly, independent bottling partners manage distribution in the concentrate operations.
Therefore, Coca-Cola makes money by selling its concentrate to bottling partners (they must place an entire order for the concentrate available in that territory as part of the bottling agreement).
To handle those operations, Coca-Cola introduced 2006 the Bottling Investment Group, which managed the bottling operations’ acquisition, divestment, and re-franchising.
The graphic below gives a good picture of the overall process and strategy which has been implemented since 2006:
Coca-Cola’s investment arm (Bottling Investment Group) was created to manage bottling operations’ purchase and re-franchisee worldwide. As those bottling operations get established, Coca-Cola, through the BIG, sells its stakes, keeps a minority equity stake, and keeps, in some cases, a minor equity stake in the bottling operations.
Both companies have found an ingenious way to scale up operations while maintaining control over the business.
In the case of Coca-Cola, the company employs a franchained model, where the company first controls operations in the short term.
Once those have been established, it moves to a licensing/partnership/exclusivity model, where it can keep control of its bottling partners while making its overall organization lighter.
McDonald’s also employs an interesting model, which is a heavily franchised one.
Indeed, as of 2023, most McDonald’s restaurants are franchises.
McDonald’s finally transitioned to a heavily franchised business model in 2022, reaching its long-term objective of 95% of franchised restaurants vs. its total restaurants worldwide.
Approximately 95% of the restaurants at year-end 2022 were franchised, including 95% in the U.S., 89% in International Operated Markets, and 98% in the International Developmental Licensed Markets.
Yet, to keep lousy control over the franchising operations, McDonald’s directly negotiate lease terms, and it’s usually the owner/or primary renter of the land where the franchising operations sit.
In this way, McDonald’s lessens the cost of owning and operating franchises directly, while still allowing franchise restaurants to follow the company’s policies via its lease operations.
In that respect, McDonald’s is more of a real estate company than a restaurant business.
McDonald’s is a heavy-franchised business model. In 2022, over 60% of the total revenues came from franchised restaurants. The company’s long-term goal is to transition toward 95% of franchised restaurants (by 2022, franchised restaurants were 94.7% of the total). The company generated over $23 billion in revenues in 2022, of which $8.75 billion was from owned restaurants and $14.1 billion from franchised restaurants.
Key takeaways
An ingenious distribution network and the system drive the Coca-Cola business model.
Beginning in 2006, Coca-Cola established the Bottling Investment Group, which invests initially in bottling companies by bringing them under the control and ownership of Coca-Cola.
As local operations are established, and marketing and distribution activities run efficiently, Coca-Cola divests its controlling stakes, thus forming a franchising relationship with its bottling partners.
Bottling partners keep an exclusivity agreement with other third-parties bottling companies to produce or distribute under the territories those bottling partners control. For the products they bottle up, Coca-Cola also reserves its right to manufacture and distribute its products.
Coca-Cola, in turn, sells concentrate to those bottling companies, which act as franchisees for the branded Coca-Cola products.
Key Highlights of Coca-Cola’s Distribution Strategy:
Investment and Franchising Model: Coca-Cola’s distributionstrategy, implemented in 2006, involves initially investing in bottling partners’ operations through the Bottling Investment Group (BIG) and later transitioning to a franchising model for long-term growth and distribution.
Distribution as a Key Factor: The success of Coca-Cola’s distributionstrategy is seen as a crucial element in the company’s overall business strategy, even more so than the secret formula of its beverages.
Five Large Independent Bottling Partners: Coca-Cola relies on five major independent bottling partners to handle a significant portion of its distribution. These partners accounted for 40 percent of the total unit case volume sold by the company in 2019.
Bottling Agreements: Coca-Cola has specific agreements with its bottling partners for manufacturing and selling its products. These agreements grant bottlers the rights to prepare, package, distribute, and sell Coca-Cola products within authorized territories.
Exclusivity and Control: Coca-Cola typically grants exclusivity to its bottling partners within their designated territories and products. However, Coca-Cola reserves the right to manufacture and distribute its trademarked products and brands, allowing it to maintain some control.
Investment in Marketing: Coca-Cola actively participates in its bottling partners’ sales and marketing activities, investing substantial amounts in promotional and marketing programs. For example, in 2019, the company spent $4.4 billion on such activities.
Hybrid Distribution Approach: Coca-Cola’s distribution system is a hybrid approach, combining elements of both company-owned bottling facilities (short-term chain) and franchising (long-term). This allows Coca-Cola to maintain control while keeping bottling partners independent.
Re-Franchising Strategy: As bottling operations become stable and established over time, Coca-Cola re-franchises them by selling its controlling stake. In some cases, the company retains a minor equity stake to ensure control.
Global Expansion and Capillary Distribution: Coca-Cola’s distributionstrategy enables it to expand globally while keeping capital expenditure (CAPEX) low. This approach allows the company to maintain control over bottling operations and ensure widespread distribution.
Comparison with McDonald’s: Coca-Cola’s distribution model differs from that of McDonald’s, which also employs franchising but focuses on controlling real estate and lease terms to maintain control over franchise operations.
Coca-Cola has revolutionized its business strategy by leveraging AI to transform product development and market responsiveness. A concrete example is the company’s Cherry Sprite launch, which was directly driven by AI analysis of consumer behavior at their Freestyle fountain machines. These smart dispensers collect real-time data on flavor combinations that customers create, revealing unexpected preferences and trends. When AI algorithms identified that cherry-flavored Sprite was among the most popular custom combinations across thousands of locations, Coca-Cola fast-tracked it from a regional test to a full national product launch. This AI-powered approach has fundamentally shifted the company from traditional market research methods to data-driven innovation, enabling them to identify and capitalize on consumer preferences in months rather than years. The success has led Coca-Cola to expand this strategy globally, using AI to predict and develop flavors based on regional fountain machine data.
Coca-Cola follows a business strategy (implemented since 2006) where through its operating arm – the Bottling Investment Group – it invests initially in bottling partners operations. As they take off, Coca-Cola divests its equity stakes, and it establishes a franchising model, as long-term growth and distributionstrategy.
Coca-Cola generated $45.75 billion in revenue in 2023, compared to over $43 billion in revenue in 2022, and $10.7 billion in profits in 2023, compared to over $9.5 billion in net profits in 2022.
Coca-Cola’s Purpose is to “refresh the world. make a difference.” Its vision and mission are to “craft the brands and choice of drinks that people love, to refresh them in body & spirit. And done in ways that create a more sustainable business and better-shared future that makes a difference in peopleโs lives, communities, and our planet.”
Coca-Cola is the market leader of the soft drink industry. It is also the most widely recognized brand, with a Business Insider study revealing that a staggering 94% of the world population recognizes the red and white logo. However, Coca-Cola faces significant challenges with increasingly health-conscious consumers and less access to water resources.
The Coca-Cola Company is an American multinational beverage corporation founded in 1892 by pharmacist Asa Griggs Candler. Many consumers associate the company with its signature soda in a red can or bottle. In truth, however, The Coca-Cola Company owns a plethora of soft drink, juice, tea, coffee, and other beverage brands.
The Coca-Cola Company has 21 different billion-dollar brands or brands that generate more than $1 billion or more in revenue each year. The company also sells its products in nearly every country in the world, with Cuba and North Korea the only two countries where it is not sold officially. Whatโs more, the Coca-Cola brand is worth $87.6 billion, making it one of the most valuable among all companies. Though these figures allow Coca-Cola to enjoy market dominance in many countries, the company is nevertheless subject to intense competition.
Pepsi is owned by PepsiCo, the holding company which owns many brands spanning from drinks to food & snacks and more. PepsiCo generated $91.47 billion in revenue in 2023, and $9.07 billion in profits for the same period. PepsiCo is primarily owned by institutional investors like The Vanguard Group (8.9%) and BlackRock (7.6%). Top individual investors comprise Robert Pohlad, the company’s board member; and the company’s CEO, Ramon Laguarta.
PepsiCo was founded in 1902 by American pharmacist and businessman Caleb Bradham as the Pepsi-Cola Company. Bradham, who hoped to emulate the success of Coca-Cola, marketed the beverage from his pharmacy and registered a patent for its recipe the following year. Today, Pepsi is a global company with a portfolio of 23 billion-dollar brands, or brands earning more than $1 billion in annual revenue. Sixteen of these brands are beverage-related, while the remaining seven are associated with snacks and other food products.
In 1965, PepsiCo acquired Frito-Lay in what the chairmen of both companies called a โmarriage made in heavenโ. The resultant company transformed PepsiCo from a soft drink organization and set it on a path to becoming one of the worldโs leading food and beverage companies. Today, PepsiCo claims to operate in more than 200 countries and territories around the world with seven distinct divisions and many successful brands.
PepsiCo generated $91.47 billion in revenue in 2023, over $86 billion in revenue in 2022, over $79 billion in revenue in 2021, and over $70 billion in 2020.
PepsiCo generated $9.07 billion in profits in 2023, compared to nearly $9 billion in profits in 2022, over $7.6 billion in profits in 2021 and over $7 billion in 2020.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
