Coca-Cola Europacific Partners is exiting its direct delivery model in Indonesia and restructuring its manufacturing footprint, signaling a strategic overhaul of its route-to-market infrastructure. The shift is a response to prolonged macroeconomic headwinds and underperformance in one of Asia’s largest consumer markets.
In Brief:
A Network Built for a Different Cycle
Indonesia, home to nearly 300 million people, has long held promise for consumer brands. But for CCEP, the market has become structurally difficult, weighed down by sluggish household spending, uneven demand, and a logistics footprint that no longer fits.
In response, the company has shuttered three single-line production sites and is phasing out its direct delivery model across Java and Bali. “We recently announced the closure of three single line production sites,” said CFO Ed Walker at the company’s latest earnings call. CEO Damian Gammell confirmed the delivery shift is well underway, noting Java will complete the transition in the second half of the year.
What’s changing isn’t just cost structure, it’s control. CCEP is replacing its legacy direct-store delivery system with a decentralized, distributor-led model aimed at improving reach, reducing rigidity, and rebalancing capital allocation.
Trading Control for Reach
The shift is not a retreat. It’s a pivot toward flexibility. In a market where small-format retail dominates and logistics costs are hard to contain, outsourcing last-mile delivery to local distributors offers a faster way to rebuild availability without carrying the weight of a fixed infrastructure.
“This will give us the ability to effectively grow distribution and availability as we continue to develop the Sparkling category,” Gammell said. By narrowing its asset base and handing fulfillment to partners, CCEP is positioning itself to compete more effectively across second- and third-tier markets, places where centralized models often struggle to scale.
Margin Recovery Without Volume Recovery
CCEP’s Indonesian overhaul is not yet about growth — it’s about control over margin. While demand remains weak, the company is taking cost out of the system early, rather than waiting for volumes to justify a bloated footprint. Site closures and simplified delivery logistics are already improving the cost-to-serve equation.
“Indonesia… is starting to show signs of improvement,” Gammell said, but the real message is structural: reset now to grow later. With macro volatility persisting across Asia, CCEP is acting ahead of recovery rather than behind it.
Network Redesign Levers for Slow-Growth Markets
CCEP’s move reflects a broader playbook for brands navigating slow-growth or structurally challenged markets. Potential levers include:
– Footprint Rationalization: Consolidating underutilized plants or shifting to multi-line facilities to lower fixed costs.
– Distributor Integration: Leveraging local partners to expand reach without adding asset intensity.
– Flexible Manufacturing: Adopting modular production setups that can pivot quickly between product lines.
– Demand-Specific Routing: Using demand signals to optimize delivery frequency, routes, and inventory allocation.
Applied selectively, these levers can help companies stay cost-competitive while maintaining the agility to respond when demand rebounds.
A Supply Chain Lesson in Letting Go
The cost of holding onto legacy infrastructure in slow-growth markets can outweigh the benefits of waiting for demand to return. CCEP’s playbook in Indonesia shows what it looks like to rebuild from the delivery model up, making strategic concessions on control to regain speed, flexibility, and future relevance.
It’s a reminder that sometimes the right move isn’t to double down on sunk assets, it’s to step back and let the market reshape your route to growth.