| Item 1.01. | Entry Into a Material Definitive Agreement. |
On February 5, 2019,Coca-Cola Consolidated, Inc. (the “Company”) and TheCoca-Cola Company entered into an incidence agreement (the “Incidence Agreement”), regarding the allocation by the Company and TheCoca-Cola Company of the net revenue generated by the Company’s marketing, promotion, distribution and sale of Covered Beverages and Related Products (each as defined in the Company’s comprehensive beverage agreement with TheCoca-Cola Company dated March 31, 2017 (as amended, the “CBA”)) within certain categories and/or product segments as determined by TheCoca-Cola Company from time to time in accordance with the Incidence Agreement (the “Shared Business Segments”). The term of the Incidence Agreement, which applies to the Company and any of its subsidiaries that are party to a bottling agreement with TheCoca-Cola Company or its affiliates, commences on April 1, 2019 and will terminate upon termination of the CBA. The Incidence Agreement amends, restates and supersedes the Company’s existing expanding participating bottler revenue incidence agreement with TheCoca-Cola Company, dated September 23, 2015 (the “2015 Incidence Agreement”).
The amount paid by the Company to TheCoca-Cola Company for concentrates, Covered Beverages and Related Products within the Shared Business Segments will be subject to quarterly adjustment as described in the Incidence Agreement based on the determination of TheCoca-Cola Company’s incidence revenue in each Shared Business Segment. TheCoca-Cola Company’s incidence revenue for Covered Beverages and Related Products sold to the Company in finished form, as well as for concentrates sold to the Company for use in the manufacture of Covered Beverages and Related Products, will be impacted by a number of factors, including the incidence rate for each Shared Business Segment as set by The Coca-Cola Company from time to time, the Company’s pricing and sales of finished products that are covered by the Incidence Agreement, the channels in which the finished products covered by the Incidence Agreement are sold by the Company and the package mix of the Shared Business Segments sold by the Company.
Pursuant to the Incidence Agreement, The Coca-Cola Company may, upon 90 days’ prior written notice, (i) modify the settlement price and/or the excluded cost of goods component for any Covered Beverages or Related Products (or the concentrate components thereof), provided such settlement prices are the same for all Expanding Participating Bottlers and Participating Bottlers (each as defined in the CBA), (ii) change the incidence rates, provided such rate change is proportionately applied on a percentage basis to all other Expanding Participating Bottlers, and (iii) modify the Shared Business Segments, including by changing the composition of any segment, adding or deleting segments, and determining whether and how any segments apply to new Covered Beverages and/or Related Products, and/or the incidence rates applicable to any new or modified Shared Business Segment, provided such revisions are applied to all Expanding Participating Bottlers and Participating Bottlers. Any adjustments with respect to periods ending prior to April 1, 2019 will be calculated pursuant to the 2015 Incidence Agreement.
The foregoing description of the Incidence Agreement is qualified in its entirety by reference to the full text of such agreement and all exhibits thereto, which are filed as Exhibit 10.1 to this Current Report onForm 8-K and incorporated herein by reference.
