Coca-Cola

Coca-Cola does not make Coca-Cola. The company in Atlanta creates the syrup concentrate, owns the brand, and runs the marketing. The actual beverage, the bottling, the distribution, the delivery to every corner shop and vending machine on Earth, is done by independent bottling partners who buy the concentrate from Coca-Cola and handle everything else. This franchise bottling model is one of the most asset-light distribution systems ever designed. Coca-Cola gets the brand and the margins. The bottlers get the trucks and the warehouses. The numbers reveal the genius. Coca-Cola generates over forty five billion dollars in annual revenue with operating margins above thirty percent. The company's gross margin on concentrate sales exceeds sixty percent because syrup is extraordinarily cheap to produce. The bottlers operate on much thinner margins, typically eight to twelve percent, because distribution is capital intensive. Coca-Cola deliberately structured the business so that it owns the high margin activity and outsources the low margin activity.