North America is a weak spot in the global drinks business, largely because of the decline of carbonated soft drinks. With PepsiCo’s soda volume dropping 5 percent last year, according to Beverage Digest, the company had to figure out how to restructure its distribution network in order to fill customer needs more readily.

Last year, PepsiCo agreed to purchase it’s two largest independent bottlers for $7.8 billion. This all comes at a time where the carbonated beverage market is losing share to healthier, non-carbonated products like juice and water. Ten years ago, soft drinks comprised 70% of PepsiCo’s beverage selection, where today they are responsible for only 45%.

PepsiCo wanted to put an end to the days in which it argued with bottlers over profits and plans for new brands. When the company wanted to try new drinks or package sizes, the requests were sometimes hard for its big, independent bottlers to fulfill at the pace Pepsi wanted. That highlighted one of the central tensions: Bottlers thought Pepsi was too demanding, and Pepsi thought bottlers didn’t move fast enough. Big decisions between PepsiCo and its large bottlers too often became tug-of-wars over revenue, sales volume and profits. This shows just how willing partners must be to work with one another and just how important it is for businesses in partnerships to respond to the wants of the other.

The new system put in place by PepsiCo now allows for a more integrated and seamless operation. This allows more flexibility to move with consumer’s changing tastes and compete with rivals like Coca-Cola in the short term. And in a time where big-box chains like Wal-Mart and CostCo continually demand lower prices, this acquisition allows PespiCo more negotiating leverage than its rival, leaving the boys at Coca-Cola to play catch-up.

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