Coca Cola 2003 Annual Report Download - page 8

sales. Approximately 91% of non-U.S. unit case volume for 2003 was attributable to sales of beverage
concentrates and syrups to authorized bottlers in approximately 544 licensed territories, together with sales by
the Company of finished beverages other than juice and juice-drink products. Approximately 6% of 2003
non-U.S. unit case volume was attributable to fountain syrups. The remaining approximately 3% of 2003
non-U.S. unit case volume was attributable to juice and juice-drink products.
In addition to conducting our own independent advertising and marketing activities, we may provide
promotional and marketing services and/or funds and consultation to our bottlers. In most cases we do this on a
discretionary basis, under the terms of commitment letters or agreements, even though we are not obligated to
do so under the terms of the bottling or distribution agreements between our Company and the bottlers. Also on
a discretionary basis, in most cases, the Company may develop and introduce new products, packages and
equipment to assist its bottlers. Likewise, in many instances we provide promotional and marketing services
and/or funds and/or dispensing equipment and repair services to fountain and bottle/can retailers, typically
pursuant to marketing agreements. The aggregate amount of funds provided by our Company to bottlers,
resellers, vendors or customers of our Company’s products, principally including participation in sales promotion
programs and volume-based incentives, was approximately $3.7 billion in 2003.
The profitability of our business outside the United States is subject to many factors, including
governmental laws, regulations and monetary policies; competitive, economic and political conditions in the
countries in which our business is conducted; and the risk of changes in currency exchange rates and regulations.
Bottler’s Agreements and Distribution Agreements
Separate contracts (‘‘Bottler’s Agreements’’) exist between our Company and each of its bottlers regarding
the manufacture and sale of soft drinks. Subject to specified terms and conditions and certain variations, the
Bottler’s Agreements generally authorize the bottler to prepare particular designated Company Trademark
Beverages, to package the same in particular authorized containers, and to distribute and sell the same in (but
generally only in) an identified territory. The bottler is obligated to purchase its entire requirement of
concentrates or syrups for the designated Company Trademark Beverages from the Company or Company-
authorized suppliers. We typically agree to refrain from selling or distributing or from authorizing third parties
to sell or distribute the designated Company Trademark Beverages throughout the identified territory in the
particular authorized containers; however, we typically reserve for ourselves or our designee the right (1) to
prepare and package such beverages in such containers in the territory for sale outside the territory and (2) to
prepare, package, distribute and sell such beverages in the territory in any other manner or form. Territorial
restrictions on bottlers vary in some cases in accordance with local law.
The Bottler’s Agreements between us and our authorized bottlers in the United States differ in certain
respects from those in the other countries in which Company Trademark Beverages are sold. As further
discussed below, the principal differences involve the duration of the agreements; the inclusion or exclusion of
canned beverage production rights; the inclusion or exclusion of authorizations to manufacture and distribute
fountain syrups; in some cases, the degree of flexibility on the part of the Company to determine the pricing of
syrups and concentrates; and the extent, if any, of the Company’s obligation to provide marketing support.
Outside the United States. The Bottler’s Agreements between us and our authorized bottlers outside the
United States generally are of stated duration, subject in some cases to possible extensions or renewals of the
term of the contract. Generally, these contracts are subject to termination by the Company following the
occurrence of certain designated events. These events include defined events of default and certain changes in
ownership or control of the bottler.
In certain parts of the world outside the United States, we have not granted comprehensive beverage
production rights to the bottlers. In such instances, we or our designees typically sell canned (or in some cases
bottled) Company Trademark Beverages to the bottlers for sale and distribution throughout the designated
territory under distribution agreements, often on a non-exclusive basis. A majority of the Bottler’s Agreements
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