Coke, bottlers cautious on mixing soda, beer sales

For beverage executives at Coca-Cola Co headquarters, mixing beer and soda is still not a good idea at the consumer level, but could offer back-office savings.

Rival soft-drink maker PepsiCo Inc and brewer Anheuser-Busch InBev last month agreed to jointly purchase goods and services, from computers to travel. The deal prompted the industry to question whether there would be greater collaboration between the two companies.

Mexican brewer and bottler Femsa has also been in talks about a possible sale of its beer business, putting more scrutiny on the partnership between bubbly alcoholic and nonalcoholic drinks.

"My feeling has always been that it is very important to keep the strategic functions separate," Coke Chief Executive Officer Muhtar Kent said at the company's investor meeting in its hometown of Atlanta on Tuesday.

Kent stressed the many differences between selling beer and soft drinks, including price points and regulation. But he did not rule out digging deeper for savings.

"If there are any possible synergies in terms of the back end, such as warehousing, freight, IT," he said, "I think in this day, we need to not leave anything on the table."

Consumer Edge Research analyst William Pecoriello said the partnership model was highly specific to markets and brands.

For example, it would not make sense for Coke to put beer on delivery trucks in Mexico, where it has the lion's share of the market, as it does for Pepsi.

"What might be right for a competitor might not be right for Coke," Pecoriello said.

A discussion about whether to combine shipments of beer and soft drinks was also first on the agenda of a roundtable meeting of Coke bottler executives on Tuesday.

Carlos Salazar, CEO of Femsa's Coca-Cola Femsa unit, said that while it was once easier to combine distribution of different types of drinks, the demands of new product categories require a more sophisticated model to bring them to market.

He declined to discuss the implications a sale of Femsa's beer operations would have on his business, which bottles Coke drinks in Latin America.

Terry Davis, group managing director of Australian bottler Coca-Cola Amatil, said mixing beer and soda sales made sense in certain markets, but not all.

"It's a market-by-market proposition," said Davis, whose company sells some beer with its soft drinks.