Why Pepsi Bought Its Bottlers

The structure of both PepsiCo's (PEP) and Coca-Cola's (KO) beverage businesses haven't made sense for some time. The companies sell concentrate and syrup to bottlers, which mix it and sell it to stores. The bottlers, separate companies, do the grunt work of distribution while PepsiCo and Coca-Cola control the core product and the brands.

That worked for years. But several changes in the beverage business are forcing the companies to rethink how they operate. PepsiCo was so adamant about taking over its bottlers that on Tuesday it announced it would pay 20 percent more for them than it had offered three months ago, when a very public, often nasty negotiation began. (The Wall Street Journal's Deal Journal blog offers an interesting account of how the deal was finally reached.)