In the 1970's, the bottling networks of Coke and Pepsi were owned by independent bottlers, multibrand franchise firms, diversified companies, and the concentrate producers. Then in the 80's the franchise owners and the concentrate producers purchased large percentages of the various bottling networks. By 1990, most of the major diversified companies, including one called Beatrice and General Cinema had sold their bottling operations, and in 1990 independently owned franchises went form owning 45% of all bottling plants, to only owning 17% percent of them. .
In the early 1980's about 150 of Coca Cola's 350 franchises came up for sale, and Coca Cola was able to acquire to of it's biggest franchises, which accounted for 15% of Coca-Cola's U.S. volume and 40% of Dr Pepper's volume. These acquisitions made it so that Coca Cola had 38% of its bottle ownership, and of this greatly increased their profit. After these acquisitions 51% of Coca Cola Enterprises was sold to the public. After this procedure CCE's net selling price fell 2.5% per case in 1987 and 1998. CCE's profits were absolutely terrible in the late 80's. So in order to rectify the situation Coca Cola made an agreement with the Master Bottler Contract, which enabled them to increase the price of Coca Cola, syrup by 60% to any new bottlers.
In 1986 PepsiCo acquired the independent bottler MEI for $600 million and Allegheny Beverages for $ 168 million. Pepsi did this so that eventually they would be able to own the majority of the distributing companies that distributed Pepsi products, and by 1990 they owned 51% of the distributing companies. After Pepsi acquired these companies they focused on gaining production and distribution efficiencies, and they were much more successful in doing this the Coca Cola was when they attempted to do virtually the same thing. .
Pepsi's purchases eventually led to significant changes in their organization.
