Coca Cola 2004 Annual Report Download - page 12

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Most of our beverages business currently is in soft drinks, as that term is defined in this report. The
soft-drink business, which is part of the nonalcoholic beverages segment, is itself highly competitive, and soft
drinks face significant competition from other nonalcoholic beverages. Our Company is the leading seller of
soft-drink concentrates and syrups in the world. Numerous firms, however, compete in that business. These
consist of a range of firms, from local to international, that compete against our Company in numerous
geographical areas.
Competitive factors with respect to our business include pricing, advertising, sales promotion programs,
product innovation, increased efficiency in production techniques, the introduction of new packaging, new
vending and dispensing equipment, and brand and trademark development and protection.
Positive aspects of our competitive position include strong brands with a high level of consumer acceptance,
a worldwide network of bottlers and distributors of Company products, sophisticated marketing capabilities and
a talented group of dedicated employees. Negative aspects of our competitive position include strong
competition in all geographical regions, and, in many countries, a concentrated retail sector with powerful
buyers able to freely choose between Company products, products of competitive beverage suppliers and
individual retailers’ own store-brand beverages.
Raw Materials
The principal raw materials used by our business are nutritive and non-nutritive sweeteners. In the United
States, the principal nutritive sweetener is high-fructose corn syrup, a form of sugar, that is available from
numerous domestic sources and is historically subject to fluctuations in its market price. The principal nutritive
sweetener used by our business outside the United States is sucrose, another form of sugar, that is also available
from numerous sources and is historically subject to fluctuations in its market price. Our Company generally has
not experienced any difficulties in obtaining its requirements for sweeteners. In the United States we purchase
our requirements of high-fructose corn syrup with the assistance of Coca-Cola Bottlers’ Sales & Services
Company LLC (‘‘CCBSS’’). CCBSS is a limited liability company that is owned by authorized Coca-Cola bottlers
doing business in the United States. Among other things, CCBSS provides procurement services to our
Company for the purchase of various goods and services in the United States, including high-fructose corn syrup.
Generally, raw materials utilized by us in our business are readily available from numerous sources.
However, aspartame, an important non-nutritive sweetener that is used alone or in combination with other
important non-nutritive sweeteners such as saccharin or acesulfame potassium in our low-calorie soft-drink
products, is currently purchased by us primarily from The NutraSweet Company, Holland Sweetener Company
and Ajinomoto Co., Inc., which we consider to be our only viable sources for the supply of this product.
Acesulfame potassium is currently purchased from Nutrinova Nutrition Specialties & Food Ingredients GmbH,
which we consider to be our only viable source for the supply of this product. Our Company generally has not
experienced any difficulties in obtaining its requirements for sweeteners.
Our Company sells a number of products sweetened with sucralose, a noncaloric sweetener, and we plan on
offering our customers a larger number of new products with sucralose in 2005. We work closely with Tate &
Lyle, our sucralose supplier, to maintain continuity of supply. Although Tate & Lyle is our single source for
sucralose, we do not anticipate difficulties in obtaining our requirements for sucralose.
With regard to juice and juice-drink products, the citrus industry is subject to the variability of weather
conditions. This includes in particular the possibility of freezes in central Florida, which may result in higher
prices and, therefore, lower consumer demand for orange juice throughout the industry. Due to our ability to
source orange juice concentrate from the Southern Hemisphere (particularly from Brazil), the supply of juice
available that meets the Company’s standards is normally adequate to meet demand.
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