Coca Cola 2005 Annual Report Download - page 45

Hospitality Division’s unit case volume increased 2 percent as a result of effective customer programs and
improved restaurant traffic.
In the Africa operating segment, unit case volume increased 3 percent in 2004 compared to 2003, primarily
as a result of the growth in South Africa, where unit case volume increased 7 percent, and in Morocco and
Kenya. These increases were partially offset by unit case volume declines in Nigeria, due to de-emphasis on
less-profitable water packages and weakness in noncore brands, and in Egypt.
In the East, South Asia and Pacific Rim operating segment, unit case volume increased 1 percent in 2004
versus 2003, primarily as a result of the growth in the South East and West Asia Division, partially offset by an
8 percent decline in the Philippines due to affordability and availability issues.
Unit case volume in the European Union operating segment decreased 3 percent in 2004 versus 2003,
primarily due to limited brand and package availability in the discount retail channel in Germany resulting from
the mandatory deposit legislation and poor weather conditions in northern Europe.
Unit case volume for the Latin America operating segment increased 3 percent in 2004 versus 2003,
primarily reflecting strong growth in Brazil, Argentina and Venezuela resulting from the execution of the
Company’s long-term investment strategy with an emphasis on brand building, new package alternatives, and
close coordination with bottling partners to drive superior local marketplace execution, offset by a de-emphasis
on large-format water and powdered drinks in Mexico.
The North Asia, Eurasia and Middle East operating segment’s unit case volume increased 12 percent in
2004 compared to 2003, primarily led by 22 percent growth in China as a result of a new advertising campaign,
innovative packaging and promotion in the cities, and affordable 200ml packaging in the towns. Japan’s growth
of 4 percent was driven by Trademark Coca-Cola unit case volume growth of 3 percent and Trademark Fanta
growth of 17 percent. Unit case volume growth in Turkey, Russia and the Middle East was mainly due to
successful promotions and continued positive economic trends.
Gallon Sales
In 2005, the 1 percent increase in gallon sales in the North America operating segment was primarily
related to the Retail Division. In Africa, the 7 percent gallon sales growth was led by South Africa, Nigeria and
Egypt. In Latin America, the 6 percent gallon sales increase was led by growth in Brazil, Mexico and Argentina.
The 12 percent increase in gallon sales in the North Asia, Eurasia and Middle East operating segment was
primarily due to growth in China, Russia and Turkey. Japan gallon sales were slightly higher in 2005 compared to
2004. The increases in gallon sales in the North America; the Africa; the Latin America; and the North Asia,
Eurasia and Middle East operating segments were offset by a 1 percent decrease in the European Union
operating segment and a 6 percent decrease in the East, South Asia and Pacific Rim operating segment. In the
European Union operating segment, gallon sales decreased 1 percent, with the largest declines occurring in
Germany and Northwest Europe, partially offset by growth in Spain and Central Europe. In the East, South Asia
and Pacific Rim operating segment, gallon sales decreased 6 percent, primarily due to the continuing challenging
conditions in India and the Philippines.
The decrease in gallon sales in Germany was primarily due to the continuing impact of the mandatory
deposit legislation on nonrefillable beverage packages and the corresponding limited availability of our products
in the discount retail channel, along with overall industry weakness. In the second half of 2005, the Company
achieved a limited range of availability of its products in most discounters. Results in Germany stabilized in the
second half of 2005. The German legislature passed an amendment to the mandatory deposit legislation that will
require retailers, including discounters, to accept returns of each type of nonrefillable beverage containers they
sell, regardless of where the beverage package type was purchased, the amendment allows for a transition period
until mid-2006. We expect the German business to continue to stabilize during 2006. For a discussion of the
operating environment in Germany, refer to the heading ‘‘Critical Accounting Policies and Estimates—
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