How should a soda maker and its bottlers account for a program that subsidizes the bottlers' purchases of vending machines?
How should a soda maker and its bottlers account for a program that subsidizes the bottlers' purchases of vending machines?
The Coca-Cola Company faced intensified competition from rivals such as PepsiCo in the 1990s, putting pressure on margins and hurting its bottling companies. As a counter-strategy, Coca-Cola and its bottlers sought to grow its vending machine business, which had higher margins. As a way to incentivize its bottlers to make the investment in vending machines, Coca-Cola provided cash support for one-quarter of the cost of each vending machine. In this case students consider how Coca-Cola and its bottlers should account for this payment by examining soda pricing, financial data, and the relationships between Coca-Cola and its bottlers.
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