The Breeze With Beverage Digest
The Breeze With Beverage Digest
Episode 14: Keurig Dr Pepper’s Seismic Shift and What it Means for the Coke and Pepsi Systems
Beverage Digest’s Duane Stanford and The Breeze contributor John Sicher hash through the strategy and consequences behind Keurig Dr Pepper’s decision to take back Dr Pepper franchise territory from Reyes Coca-Cola in California and Nevada. Will KDP take more Dr Pepper territory from Coke, or even Pepsi? Are there implications for the nagging question of whether PepsiCo should refranchise its U.S. bottling system?
Hello and welcome to the Breeze with Beverage Digest. I'm your host, dwayne Stanford. This is where we bring you into the kinds of industry conversations that we have here every day at Beverage Digest. We dissect what's happening, connect the dots and ask the most important question what does this mean? With me today is our regular podcast contributor, john Sitcher. John has spent years following the beverage industry, including as a former publisher of Beverage Digest. Since then, john has consulted for Coca-Cola and Body Armor prior to the Coke acquisition. He's also served as an expert witness in beverage-related court cases.
Speaker 2:John hello, dwayne good to be with you again.
Speaker 1:So we had big distribution news this week as we learned that Keurig Dr Pepper has decided not to renew a distribution agreement with Ray's Coca-Cola bottling for franchise territory in California and Nevada. Ray sued under California franchise laws to stop that termination. They asked a judge to force a renewal or to make KDP show why the agreement should not be renewed. Kdp a few days earlier had asked a Texas judge to validate KDP's rights under the agreement, saying that agreement plainly allows either party to end the distribution license for any reason or for no reason. Now, john, for years you and I have probably asked various KDP executives if they would ever take back Dr Pepper distribution and it was almost asked as sort of like. Of course you're not going to, but you know you always want to kind of gauge the relationship. I think we're seeing a very new KDP today, wouldn't you agree?
Speaker 2:You know, dwayne, this whole, the lawsuit raises so many interesting issues about this industry and changes in the industry. You know, when Coke and Pepsi bought back their big bottlers in 2009 and 2010, the traditional franchise agreements were changed. I mean going back many, many years. I remember a cola bottler saying to me jokingly you know, when my daddy died he said to me I love you, you son, lead a good life and don't mess with the franchise agreement.
Speaker 2:Um, I think that the these agreements are very different today and this, this, this action by kdp, um, I find very surprising because the franchising philosophy behind Dr Pepper for years and years and years articulated to me many, many, many, many years ago by a man named Foots Clements, who was really the granddaddy of Dr Pepper in many ways was that he wanted to have the best bottler and the best territory to build the brand to national status. And for many, many years it's been about 40% on the Coke system, 40% in the Pepsi system and about 20% in the independent system. And KDP apparently wants to change that and it surprises me greatly me greatly.
Speaker 1:And if you go back, way back, what are the reasons that a company like it might surprise some people who you know aren't in the industry don't really necessarily or just come into the industry and trying to work through this? I think you know I get calls from journalists all the time and they're, you know, usually confused about wait a minute. Dr Pepper is distributed by Coke and Pepsi. You know what was the reason before that? I mean, what was it about the KDP system that required them to go to, in essence, competitors to be distributed?
Speaker 2:The strength of the Coke and Pepsi systems, their strength in multiple channels, their strength in the cold bottle channels I mean, if you look at even the Nielsen data today. Channels I mean if you look at even the Nielsen data today the Coke and Pepsi systems simply have more strength in the cold bottle channels than the white system does. And I think that, going back many, many, many years, the management of the old Dr Pepper company realized that if they wanted to build a national brand with really pervasive strength, they needed to rely heavily on the best bottlers in the best markets. And in most cases, with the exception of places like Texas, the best bottlers in the best markets were Coke and Pepsi bottlers.
Speaker 1:I mean, back in the day, a lot of it was scale too. I mean, these companies are big public companies, national distribution systems. You're forever wanting, needing scale in order to make these businesses really hum the way they're supposed to. So this was kind of a perfect marriage, because KDP got more distribution for its products. It got to get into places that it might not have been able to on its own or that would be subscale. Meantime, coke and Pepsi actually are able to put other products on their trucks that are in demand, especially in certain parts of the country. So that was kind of a big part of the win-win there, correct?
Speaker 2:It was, and the old Dr Pepper 7-Up company used to promote a priority brand argument for dr pepper where they would basically make the case to coke and pepsi bottlers that where dr pepper is on display with a cola company's products there was more traffic that to that display and more traffic to a cooler and you know there was. There's been a very, very mutually beneficial relationship for many years between the Dr Pepper company now KDP and the Coke and Pepsi bottlers who have it.
Speaker 1:So let's go back to 2009, 2010. And this was a real potential inflection point in this relationship. That's Dr Pepper with Pepsi, dr Pepper with Coca-Cola and you'll remember quite well, john, because you were covering it for Beverage Digest, I was covering it for Bloomberg but this is when Pepsi bought its two largest bottlers, pepsi Americas and Pepsi Bottling Group, and Coca-Cola bought CCE and so they brought those in-house and, you know, basically unfranchised those massive bottlers and, because of that change in control, they had to renegotiate agreements for Dr Pepper with, at the time, dr Pepper Snapple Group and CEO Larry Young. They went through negotiations and they ended up doing that. I mean, pepsico paid $900 million for the rights, coke paid about $715 million for the rights for the territories previously held by those bottlers and it looked like this relationship I mean these were 20-year agreements with 20-year renewals I mean it looked like, okay, this was just going to go on sort of for a long time again.
Speaker 1:In the meantime, you had KDP that was created in 2018 by the merger of Keurig Green Mountain and Dr Pepper Snapple Group. Brand new management team, new philosophies. We find ourselves now, even after a franchise renewal with Rays in 2017, in the position we're in now, but that 2010-29 time frame seemed like that was just going to continue on for some time.
Speaker 2:No, what I find fascinating is, beyond the legality, that KDP actually wants to terminate a very powerful and strong Coke bottler's rights to Dr Pepper in an important market like Southern California and Nevada, where one would think that that Coke bottler has done a very good job with Dr Pepper for many years, that bottler and his predecessors- and it seems clear from this that KDP is not saying that Rays has not done a good job.
Speaker 1:I mean, part of what's at issue is that Rays is saying, hey, if we're doing a great job and you're not making a case that we're not, why are you terminating us? But I think there's a couple of things here that are important, and one is that when the RAISE agreement was reached which would have been, as you say, following the refranchising of Coke's bottling system starting in 2015, that was prior to the formation of Keurig Dr Pepper. So you had basically Dr Pepper Snapple in its old form, renegotiating that agreement with Ray's and, in essence, just continuing the same agreement they had done, you know, seven years previous. Well, then you had KDP that was formed in 2018, new management group, and this management group has been very active in optimizing its territory, it says, which basically means they've been buying territories when it makes sense. They've been reserving their rights for Dr Pepper not to be transferred to other bottlers because they might want to make those acquisitions, and now we see they're making this really significant move in California.
Speaker 1:And, john, I mean, you know these, you know, you know our system maps, the Coke and Pepsi system maps and our Dr Pepper map. And what now, john? I mean you know these, you know, you know our system maps, the Coke and Pepsi system maps and our Dr Pepper map. I mean we map these territories pretty specifically and the maps are pretty telling when it comes to this case, because you've got a situation where Dr Pepper or Keurig Dr Pepper has significant territory in Nevada, they have territory in California and then the other major bottler in California on the Coke side is Ray's, which has, you know, in essence, northern and Southern California and Southern and kind of the Eastern portion of Nevada, and then right in the middle of California you've also got PepsiCo there.
Speaker 1:But if you look at what they're trying to, what they want to take back from Rays, it's, it's, it's continue, it's, it's contiguous with Dr Pepper's, with Keurig Dr Pepper's existing territory. So this seems clearly like at least so far it seems more like one of these optimization plays by Keurig Dr Pepper. They they believe these territories would work well with their existing territories. They want to own as much of their system as they can. I don't know that we can jump to the conclusion yet that this means that they're going to suddenly try to go after Coke-held Dr Pepper territory. Do you have a view on that?
Speaker 2:I don't know, it's a good question. I mean, I think that you know, I would imagine Coke bottlers and Pepsi bottlers had a little bit of a wake-up call when they read your report on this lawsuit and this controversy. You know again. You know again the Keurig Dr Pepper management have to make a decision and that is will they do better financially under the current arrangement of selling Dr Pepper concentrate to a very large and powerful Coke bottler, say in Southern California, or will they do better on taking the brand back into their own system with, I believe, a substantial loss of volume, but picking up the revenue stream from selling to retailers which they don't have now because Coke Reyes does you know, curie Dr Pepper is either has made that determination or needs to make that determination. I am very surprised. I think they've made it yeah, They've made it.
Speaker 1:I mean, it sounds like by this move they believe that even if they lose some volume, they're going to make it up by owning that revenue stream, as you talked about.
Speaker 2:And that's going to depend upon how much volume they lose, and I would think they would lose. I wouldn't know how to quantify it, but I would think moving from a Coke bottler to the independent system they're going to lose a considerable amount of volume and again, maybe they'll do better financially. I don't know. But I think that KDP is certainly making a judgment and for their sake I hope their judgment plays out. I'm not sure that I see the wisdom of pulling Dr Pepper out of a strong Coke or Pepsi bottle in a territory like Southern California.
Speaker 1:You know, you're right. I think there was kind of a shudder through the Coke system and, you know, maybe through some of the independents as well, just given what's happened over the last couple of years, given what's happened over the last couple of years, you know, a little bit of a shutter in whether you know somehow KDP might want their territory. Now I did an interview with the new CEO of KDP, tim Koffer, and the outgoing CEO, who's now executive chairman, bob Gambgort, and of course Bob is sort of the architect, him and his leadership team, in the last few years of their DSD optimization, which you know obviously led to this move in California. But I did ask them and this was again before these lawsuits. So you know, I was just, you know, asking the same kind of question we typically ask is we're always trying to gauge this relationship and you know, if you read the tea leaves of these 30 deals they've done with various bottlers over the last couple of years, I mean it's pretty obvious that there's some chance they might want some Dr Pepper, some significant Dr Pepper territory. You know, when I asked them, they basically said look, if you look at it in the long term, this Dr Pepper brand is very important to us. It's a growth engine of our business. They want as much quote influence or control over our business as possible, end quote.
Speaker 1:But he said, having said that, we don't necessarily have to own everything. So you know, I think what I'm hearing there is that, yeah, we're absolutely going to think about owning Dr Pepper territory when it makes sense. We don't necessarily have to own everything, but we're going to go after the ones that make sense for us. So you know, we'll see what that means. But I think that's clearly a change of direction. I mean there's been years change of direction. I mean there's been years. I mean I've talked to people who've told me that years ago in Dr Pepper Snapple, going back to the Cadbury days, there was pretty fierce debates about whether they should take back Dr Pepper territory or not, whether it made more sense to give up the volume but get that profit pool. So this isn't a new debate within uh, dr pepper and now koreg, koreg, dr pepper, um, but it's one that now you have a different management team that seems convinced by that argument, to some degree at least, or at least this is an indication of that look, let me say two things.
Speaker 2:Um, firstly, I think shutters.
Speaker 2:There's probably some shutters in the peps too, because if you're a Pepsi bott will approve a franchise transfer of Dr Pepper to an acquiring Pepsi bottler or whether in that territory, kdp will want to take that back, which probably changes the valuation of a deal for that Pepsi bottler.
Speaker 2:In terms of the other point you were making in Southern California, which is a very, very big and important market during my years at Beverage Digest I spent a lot of years out there If you're an independent bottler and you're going into retail accounts with 7-Up, rc, a&w and Sunkist A&W and Sunkist those are great brands but they're not big, hefty flagship brands like Coke or Pepsi or Dr Pepper. So imagine how the dynamics change of going into a retail account if you're an independent or white system bottler with 7-Up, a&w, rc and Sunkist and now with Dr Pepper. It certainly makes the independent bottlers stronger in that market. There's no doubt about it. However, again, is it better for KDP or is it better for them financially to have Dr Pepper in a Coke or Pepsi bottler or in their own independent system? That's their determination to make. As I said, their decision surprises me, but they're very smart people.
Speaker 1:Yeah, I mean, and that does raise questions. So you know what is KDP's endgame, do they? You know? Let's just say they block an independent sale of a Dr Pepper franchise to another third party. If they're blocking that, does that mean they want to buy it? Does that mean you know they're going to? You know price match and you know pay whatever valuation is offered up by that other third party. Does that mean they want to? You know, get it for, you know a better price? You know, I think those are all questions that it raises, that we'll have to see how it bears out.
Speaker 1:But I tell you, another question that's been raised is whether they're going to go after KDP is going to, you know, try to take back Coke territory, take back Dr Pepper territory held by Coke bottlers. And some have read the tea leaves and say, okay, they seem to be leaning towards, you know, coke franchises in this optimization. Is there any chance they're going to try to pull back this territory? And then they want to actually move it over to the PepsiCo system. I don't think, I don't see that. That does not make sense to me. But do you have a view on that? You know?
Speaker 2:it's possible. Again, the prevailing theory for many, many, many years was 40% in the Coke system for Dr Pepper, 40% in the Coke system, 40% in the Pepsi system, the Coke system, 40% in the Pepsi system, 20% in the independent system. That way, neither the Coke nor the Pepsi system had too much power vis-a-vis the company. Each had about 40%. I'd be surprised if they want to put it into the Pepsi system. Maybe they do, but look, the Pepsi system has had its own struggles If you go back to the transactions you were talking about in 2009 and 2010,. Since then, the Pepsi system has way underperformed the industry and the Coke system.
Speaker 2:So does KDP want to put it into a system which has been underperforming since those transactions took place? I mean, I happened to look up some data, Dwayne, in your new factbook which to do a unsolicited plug. The data in your factbook is terrific and I would encourage anybody in the industry who wants good data presented succinctly to buy the fact book plug over. Now. I will say I was. I will. I'll say that's between 2009 and 2023. Coke csd volume was down eight percent. Pepsi was down about 30. So the pepsi system has struggled since, struggled since they bought back these big bottlers relative to the Coke system. So does KDP want to put it in the Pepsi system? I agree with you. I doubt it, but we're going to find out.
Speaker 1:Yeah, I don't see that. I don't think that's the outcome. I think this really is about KDP's system and it's about optimizing their system. I think that they are. They've said all along that they're going to be opportunistic, but it could also be a situation where the California is a very specific situation that just happens to work really well. So they're going through with this because it is continuous territory to other major territories they have. There's various market dynamics that may make this make sense for them, especially as they continue to expand Dr Pepper. So you know, it doesn't necessarily signal that they're going to suddenly come after Coke franchises across the country too. We'll see.
Speaker 1:One of the really interesting dynamics here in the last number of years is Dr Pepper's performance. I mean, dr Pepper has been one of the you know one of the few carbonated soft drink brands that have consistently, you know, outperformed competitors or outperformed the market in the US. They've expanded to new regions. I mean, you know, back in the day it was a Texas brand, southeast brand. You see it in a lot more places. I think that has probably changed the math, changed the algorithm for KDP in this management and you and perhaps they see maybe a lot more runway in California, especially with the heavy Hispanic and multicultural markets there. I mean clearly that must be factoring into their decision here. Yeah.
Speaker 2:I would think so. But again, look, dr Pepper has performed very well in recent years. It's certainly outperformed a lot of the other or most of the other big CSD brands. I'd make the argument that at least part of that is because it's in the Coke and Pepsi system. Remember, as we discussed earlier, dwayne, when a Coke or a Pepsi bottler has Dr Pepper, it gives that bottler a point of difference and a competitive advantage in that market over its competing cola bottler. So, for example, in Southern California Dr Pepper is an important brand in Southern California. That gives Reyes a competitive advantage in certain respects over Pepsi in that market because it has Dr Pepper in that market, because it has Dr Pepper.
Speaker 2:What I find incredibly fascinating about this move by KDP and these lawsuits is you're right, this may be specific to Southern California, but maybe it's not going to be. And what KDP may be on the verge of is radically changing how Dr Pepper is distributed. And again it could be a big win-win for KDP but it might not be. Because I've got great regard for the Coke and Pepsi bottlers, great regard for the job they do. On the whole they're stronger and have much more penetration than the independent bottlers do. And again, during the 20 years or so that I had Beverage Digest, one of the recurring themes with new brands and upcoming brands was I want to be in the Coke system, I want to be in the Pepsi system. Well, guess what Dr Pepper is? And Dr Pepper is in the Coke and Pepsi systems and valued by the Coke and Pepsi bottlers and they do a very good job with this brand. We're on the threshold of possibly a new way of doing business for the Dr Pepper brand.
Speaker 1:So let's say that's true, that this is, you know, a radical change by KDP, changed by KDP, and you know they end up even looking at some key territories, dr Pepper territories held by PepsiCo. What does this say about PepsiCo? I mean, there's obviously this longtime question on the table with PepsiCo and that is they've got a Frito-Lay business. We've talked about this before, we've debated this before. I think they, you know, prioritize certain, you know, their Frito-Lay business and Gatorade business and all over soft drinks and they're, you know, underperformance challenged. You know Some of it is just by choice because of the way their algorithm works for their overall company, but they clearly soft drinks aren't necessarily the top priority in the company.
Speaker 1:Now, because of that, it raises questions about will they re-franchise their beverage business? Would that business be better off on its own? Pepsico says no, our entire business is better off having this beverage business because it gives us more clout at retail power of one all of that stuff. If, for some reason, they start to lose Dr Pepper territory, does that increase the likelihood or the need to re-franchise that beverage business? I think that's a key question going forward.
Speaker 2:I do too, but I think, even without getting to the Dr Pepper question, there's been again. Pepsico is a great company. Pepsico has great beverage brands, with the Pepsi brands, mountain Dew, but they have significantly underperformed the Coke system since 2009, 2010, when both companies bought their bottlers back and then Coke refranchised, starting a few years later. So you have to ask yourself why has Pepsi's CSD business underperformed Coke's? It seems to me there are two possible reasons. One would be they haven't done as good a job with the marketing, or B, they have not done as good a job with bottler execution, or both. I don't know which one it is, but I do know that there is probably an argument to be made and being made by some in the Pepsi universe that it would be a good thing for Pepsi to do some refranchising following Coke's model, given the disparity in performance over the years since 2009. Can they do it? It's going to be harder for Pepsi Because Pepsi does not have big bottlers out there.
Speaker 2:I mean, coke had Consolidated, coke had Northern New England, coke had Coke United. They brought in Reyes, they brought in Arca. So Coke refranchised the CCE territories to a bunch of very large, strong bottlers and to some smaller bottlers. If you look at the Pepsi system, there are several big bottlers there. There's Buffalo Rock, gross Jarson, pbv in the Carolinas I'm missing one Admiral, but do these bottlers and Honickman Honickman sorry, which is New York and part of New Jersey for Pepsi do these bottlers want to take on more territory? Do they have the wherewithal to take on more territory? And in other parts of the country where Pepsi or PBC if you look at the country, pbc has most of California down through the south who would be candidates to take on Pepsi territory there if they did a refranchising?
Speaker 1:I mean, it's a huge challenge.
Speaker 2:Right.
Speaker 1:I think the answer is. I mean, this is probably too blanket of a statement, but all the bottlers want more territory. The question is, at what cost? At what price? And you know whether Pepsi— Can they execute it.
Speaker 2:Can they execute it? I mean, which Pepsi bottler would? Even if they wanted to take on California, which Pepsi bottler? It would be a huge market, far from its existing market. Could they do it well?
Speaker 1:Well, you know, but they all think they can. I mean, whether they can or not, I mean you had bottlers, coke bottlers that took on huge, you know massive territories and they seem to have integrated it and figured it out. I think probably the Pepsi system could, but again, doesn't that highly depend on how much you pay for it and you, and what kind of value is PepsiCo going to want to extract? They would have to be highly motivated to re-franchise that business in order to do it and structure it in such a way that would work economically for those bottlers to take on that risk and see if they can execute, as you say, against those larger territories.
Speaker 2:Right, so let me ask you a question. I mean, what Coke did, was they brought in some new entrants into their system into the US, like Arca and Reyes? What about Pepsi, for example, would some very large Budweiser distributors a la Reyes, be interested in acquiring Pepsi territory? Would new companies finance perhaps by private equity, as I think Troy Taylor in Florida originally was? Would there be new entrants, either private equity, wealthy individuals, beer distributors, whoever, would they be interested in your view, dwayne, in coming in and taking big hunks of Pepsi territory in places like California?
Speaker 1:I think so. I mean, I think Coke already gives us the answer in that they couldn't do all that refranchising with just the existing bottlers. They actually went out and created new bottlers, as you say Coke Florida with Troy Taylor. You had Coke Southwest, which is owned by Arca Continental in Mexico. You had Rays that came in. They had to bring in these big, well-financed or at least very energetic owners to come in and do this. I mean, I think PepsiCo would have to do the same thing, based on the kind of calls I get and the demand for certain of our products, like our system books et cetera, from all kinds of professional service firms et cetera. I think there's tons of pitches happening all the time about people wanting to acquire a piece of the soft drink business. I mean, it's still an attractive business and especially depending on what you marry it up with and what capabilities you have in a certain area of the country. So it seems to me that you would, that you certainly could find buyers and you could find well-financed buyers. You could probably find buyers who can execute.
Speaker 1:I think you know what's the age-old question. I mean you know this as good as anyone how much control is PepsiCo going to want to give up. Because when you do that, when Coke creates a bottler like Coke Rays, that has this massive conglomerate behind us. That's a global conglomerate, one of the biggest private, you know company, one of the biggest private companies in the world or in the US, certainly you know there's a certain amount of control that you give up. I mean, those bottlers, you know, carry a lot of clout. That's something to be dealt with. You know how much is PepsiCo willing to do that. They're an operating company. At the end of the day they operate their Frito-Lay business. They operate, you know, 70, 80 percent of their bottling network. You know they're going to have to really be committed to knowing that they're going to give up some control because the economics just make more sense for them. But surely they're out there. I mean, do you agree with that or no?
Speaker 2:I do. I mean I think that two points. I think you're right. There's a big difference between Pepsi, and Frito-Lay is in the salty snack business, there's no Coke, so Frito-Lay is a business that they basically dominate that market. In the beverage business, they've got this huge, powerful competitor called Coca-Cola.
Speaker 2:It has always been my belief and a lot of it's been on instinct, dwayne and talking to people for years and years that there is value in the beverage business and having entrepreneurs own the franchise territories and that the franchise companies like Coke and Pepsi should focus on innovation, marketing, brand building and, in a competitive industry like beverages, let entrepreneurs and independent companies focus on the nuts and bolts of distribution and selling to retailers. I don't know what Pepsi is going to do, but I think that you're absolutely right. I think that there's a relationship between price and value, that Pepsi is smart. If Pepsi wants to do refranchising, they're probably going to have to sell off territories, given the decline in volume, at prices less than they would want, but that might be very valuable for them long term. It might basically help their business. Again, I do not know why they've underperformed Coke and CSD since 2009. Perhaps part of it is because a franchised-owned system simply performs better than a company-owned system in the carbonated soft drink business.
Speaker 1:The other really important factor is that if that business got spun off and you went to find these new franchise buyers, you would have to go through a period of integration the way Coke did. You would have to. You know these bottlers would be. They're going to buy these territories and need to invest in the territories after they've been company owned. That's going to require again, structures, deal structures that kind of make that worthwhile. It's going to take time.
Speaker 1:I think Coca-Cola, the Coca-Cola system, coca-cola bottlers would be licking their chops for the day that PepsiCo would, would refranchise, because that would give them a couple of years of just almost, you know, just. They could run wild, you know, after they've already got their system invested in and up and running and much of it automated, to be able to compete against a PepsiCo that's going through that sort of, through those sorts of transitions and integrations and investment periods. I think they would like nothing more than to compete against that, at least for a time. And then, you know, we'll worry about later, later, if PepsiCo ends up getting, you know that, being as successful as Coke, then you got, you know, the Kola Awards again. But I think that you would have to think that that would be part of the consideration here about whether pepsico would do that and when they do it as well.
Speaker 1:Uh, so I think that's a really huge factor here. I personally don't think they're going to do anything like that, you know, anytime soon. Maybe not under this current leadership. Um, I haven't just seen any signs that make me think that something's going to change on that. Never say, say never. You never know. This is a fast-paced industry, but it'll be interesting to watch.
Speaker 2:Let me ask you one other question Do you see any more changes in the Coke system over the next five to 10 years? Coke has about. Coke's finished their current round of refranchising and consolidation, but they still have about. According to your another valuable Beverage Digest book, your book about the Coke and Pepsi systems, coke I read last night still has 65 bottlers in the US. Do you foresee a time in the next five to 10 years where they will makea concentrated effort to see if they can get more consolidation, or do you think they're happy with their current system?
Speaker 1:I don't know that it would be a concerted effort. I think all these bottlers are always looking for continuous territory to buy. I don't think Coke is, you know, really a huge fan of people leapfrogging to other territories and making purchases. So I think that constrains it to some degree. But bottlers, you know, especially the larger bottlers, absolutely want more territory, especially when it's contiguous. And so you know, as some of these family bottlers decide to, you know, sell or retire, or maybe they're, you know, the next generation isn't as interested. I mean you're going to have those kind of opportunities come up. But no, I don't see any concerted effort in that. I mean, you know Coke's always kind of concerned too about the balance of power. So when you have really huge anchor bottlers, you know as we saw with CCE, and their clout grows that you know that can create certain problems for you too, or at least certain tension, I should say you know so there's that factor too. But I don't foresee any huge changes in the system. Little nips and tucks here and there, but it's pretty well said, I think you know.
Speaker 1:Back to that question about the entrepreneurs in the system, I mean, I think I mean if you look at somebody like a Troy Taylor with Coke Florida, who you know we wrote about this past week, went and visited with them.
Speaker 1:Their leadership team spent some time in the market with them, spent some time with Troy. You know this was a guy who was an advisor on Coke deals and he saw the value in the system and really convinced Coke that he would be the right person to take on some of this refranchised territory. And he's grown the amount of territory he's got from the original refranchising deals and doubled the revenue of the business to $2 billion by taking in new territory and through growth. And he's this kind of energetic entrepreneur that you're talking about. That if you were a Pepsi system and wanted to re-franchise, those are the kind of folks you might be looking to, along with some of the big well-capitalized players out there, like in the beer system, et cetera. You know the big well-capitalized players out there, like you know in the beer system, etc. So, yeah, I think not so much a lot of new activity in the Coke system, but you know we'll be watching on the Pepsi side.
Speaker 1:You're not going to worry about things to write about in the next couple of years. That is absolutely true and I'm so happy about it. It's actually a blast these days, so much going on, but hey, john, it's always a pleasure hanging out with you and talking shop and I really thank you for joining us again today.
Speaker 2:My pleasure, Dwayne. Thanks. The Breeze is produced by Beverage Digest.
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