Coca Cola 2005 Annual Report Download - page 7

In 2005, concentrates and syrups for beverages bearing the trademark ‘‘Coca-Cola’’ or including the
trademark ‘‘Coke’’ (‘‘Coca-Cola Trademark Beverages’’) accounted for approximately 55 percent of the
Company’s total gallon sales.
In 2005, gallon sales in the United States (‘‘U.S. gallon sales’’) represented approximately 27 percent of the
Company’s worldwide gallon sales. Approximately 58 percent of U.S. gallon sales for 2005 was attributable to
sales of beverage concentrates and syrups to 78 authorized bottler ownership groups in 393 licensed territories.
Those bottlers prepare and sell finished beverages bearing our trademarks for the food store and vending
machine distribution channels and for other distribution channels supplying products for home and immediate
consumption. Approximately 33 percent of 2005 U.S. gallon sales was attributable to fountain syrups sold to
fountain retailers and to 522 authorized fountain wholesalers, some of which are authorized bottlers. The
remaining approximately 9 percent of 2005 U.S. gallon sales was attributable to sales by the Company of finished
beverages, including juice and juice-drink products and certain water products. Coca-Cola Enterprises Inc.,
including its bottling subsidiaries and divisions (‘‘CCE’’), accounted for approximately 50 percent of the
Company’s U.S. gallon sales in 2005. At December 31, 2005, our Company held an ownership interest of
approximately 36 percent in CCE, which is the world’s largest bottler of Company Trademark Beverages.
In 2005, gallon sales outside the United States represented approximately 73 percent of the Company’s
worldwide gallon sales. The countries outside the United States in which our gallon sales were the largest in
2005 were Mexico, Brazil, China and Japan, which together accounted for approximately 27 percent of our
worldwide gallon sales. Approximately 91 percent of non-U.S. unit case volume for 2005 was attributable to sales
of beverage concentrates and syrups to authorized bottlers together with sales by the Company of finished
beverages other than juice and juice-drink products, in 511 licensed territories. Approximately 5 percent of 2005
non-U.S. unit case volume was attributable to fountain syrups. The remaining approximately 4 percent of 2005
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 or funds 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, our 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 or other customers
of our Company’s products, principally for participation in promotional and marketing programs was
approximately $3.7 billion in 2005.
Bottler’s Agreements and Distribution Agreements
Most of our products are manufactured and sold by our bottling partners. We typically sell concentrates and
syrups to our bottling partners who convert them into finished packaged products which they sell to distributors
and other customers. Separate contracts (‘‘Bottler’s Agreements’’) exist between our Company and each of our
bottling partners regarding the manufacture and sale of Company products. Subject to specified terms and
conditions and certain variations, the Bottler’s Agreements generally authorize the bottlers to prepare specified
Company Trademark Beverages, to package the same in authorized containers, and to distribute and sell the
same in (but, subject to applicable local law, 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
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