Coca Cola 2006 Annual Report Download - page 10

In 2006, bottling operations in which we had no ownership interest produced and distributed approximately
25 percent of our worldwide unit case volume. We have equity positions in 52 unconsolidated bottling, canning
and distribution operations for our products worldwide. These cost or equity method investees produced and
distributed approximately 58 percent of our worldwide unit case volume in 2006. Controlled and consolidated
bottling operations produced and distributed approximately 7 percent of our worldwide unit case volume in
2006. The remaining approximately 10 percent of our worldwide unit case volume in 2006 was produced and
distributed by our fountain operations and our juice and juice drink, sports drink and other finished beverage
operations.
We make equity investments in selected bottling operations with the intention of maximizing the strength
and efficiency of the Coca-Cola system’s production, distribution and marketing systems around the world.
These investments are intended to result in increases in unit case volume, net revenues and profits at the bottler
level, which in turn generate increased gallon sales for our Company’s concentrate and syrup business. When
this occurs, both we and our bottling partners benefit from long-term growth in volume, improved cash flows and
increased shareowner value.
The level of our investment generally depends on the bottler’s capital structure and its available resources
at the time of the investment. Historically, in certain situations, we have viewed it as advantageous to acquire a
controlling interest in a bottling operation, often on a temporary basis. Owning such a controlling interest has
allowed us to compensate for limited local resources and has enabled us to help focus the bottler’s sales and
marketing programs and assist in the development of the bottler’s business and information systems and the
establishment of appropriate capital structures.
In line with our long-term bottling strategy, we may periodically consider options for reducing our
ownership interest in a bottler. One such option is to combine our bottling interests with the bottling interests of
others to form strategic business alliances. Another option is to sell our interest in a bottling operation to one of
our equity method investee bottlers. In both of these situations, our Company continues to participate in the
bottler’s results of operations through our share of the strategic business alliances’ or equity method investees’
earnings or losses.
In cases where our investments in bottlers represent noncontrolling interests, our intention is to provide
expertise and resources to strengthen those businesses.
Significant investees in which we have noncontrolling ownership interests include the following:
Coca-Cola Enterprises Inc. (‘‘CCE’’). Our ownership interest in CCE was approximately 35 percent at
December 31, 2006. CCE is the world’s largest bottler of the Company’s beverage products. In 2006, sales of
concentrates, syrups and finished products by the Company to CCE were approximately $5.4 billion. CCE
estimates that the territories in which it markets beverage products to retailers (which include portions of 46
states and the District of Columbia in the United States, the United States Virgin Islands, Canada, Great
Britain, continental France, the Netherlands, Luxembourg, Belgium and Monaco) contain approximately
79 percent of the United States population, 98 percent of the population of Canada, and 100 percent of the
populations of Great Britain, continental France, the Netherlands, Luxembourg, Belgium and Monaco. In 2006,
CCE’s net operating revenues were approximately $19.8 billion. Excluding fountain products, in 2006,
approximately 60 percent of the unit case volume of CCE consisted of Coca-Cola Trademark Beverages,
33 percent of its unit case volume consisted of other Company Trademark Beverages and 7 percent of its unit
case volume consisted of beverage products of other companies.
Coca-Cola Hellenic Bottling Company S.A. (‘‘Coca-Cola HBC’’). At December 31, 2006, our ownership
interest in Coca-Cola HBC was approximately 23 percent. Coca-Cola HBC has bottling and distribution rights,
through direct ownership or joint ventures, in Armenia, Austria, Belarus, Bosnia-Herzegovina, Bulgaria,
Croatia, Cyprus, the Czech Republic, Estonia, Former Yugoslavian Republic of Macedonia, Greece, Hungary,
Italy, Latvia, Lithuania, Moldova, Nigeria, Northern Ireland, Poland, Republic of Ireland, Romania, Russia,
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