Coke whacks shop roster

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Coca-Cola Co. plans a massive review to winnow down the 5,000 marketing vendors that touch its U.S. business.

The effort, which follows an internal study conducted by McKinsey & Co., focuses on everything from packaging and print suppliers to promotion agencies retained by local bottlers, regional offices and national divisions. For example, roughly 15 promotion shops are said to be readying for the review. Already some companies have been informed they will receive requests for proposals within 60 days, said one executive who has been contacted.

"It's more of a consolidation than a cattle call. Think local, act local is over," said the executive, adding "They're taking money out of the field and putting it into national to drive the brand from the top down."

Coca-Cola spent $569 million in measured media last year, according to TNS Marketing Intelligence/CMR. In addition to its own advertising and marketing spending, the company provided $3.4 billion to support sales promotion and volume incentive programs to bottlers, according to the company's 10-K filing in March.

How many companies remain on the roster is far from decided. "Even if you got rid of 4,000 [vendors], that would be 1,000 more than you need," is the mantra being repeated about the review, according to executives in Atlanta.

Ad agencies are not believed to be part of the current McKinsey review, but that could not be confirmed.

A Coca-Cola spokeswoman wouldn't comment or speculate on the company's marketing relationships, but said, "We're always looking for ways to make our business simpler in process, sharper in strategic focus and more competitive in the market."

In January, Coca-Cola cut 1,000 workers as it merged its three North American divisions to "strip complexity from our operations and enhance efficiency," Doug Daft, chairman-CEO said at the time of the consolidation. As part of the plan, the company merged administrative functions, including sales and marketing, and simplified procurement and supply chains.

other review

The new push comes as the company prepares to hear pitches from media agencies vying for its $350 million media buying and planning consolidation. Last week, Coca-Cola moved its $40 million U.K. Coke Classic account to independent agency Mother from Interpublic Group of Cos.' McCann-Erickson Worldwide after creative shootout (see P. 22). A week earlier, McCann lost the Coke Classic business in France to Havas' BETC Euro RSCG, Paris.

"They're trying to pick best in class and they're on a search for the most productive, competitively advantaged integrated communications planning and execution they can get," said a senior executive close to the media review.

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