Coca Cola 2006 Annual Report Download - page 12

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Seasonality
Sales of our ready-to-drink nonalcoholic beverages are somewhat seasonal, with the second and third
calendar quarters accounting for the highest sales volumes. The volume of sales in the beverages business may
be affected by weather conditions.
Competition
Our Company competes in the nonalcoholic beverages segment of the commercial beverages industry.
Based on internally available data and a variety of industry sources, we believe that, in 2006, worldwide sales of
Company products accounted for approximately 10 percent of total worldwide sales of nonalcoholic beverage
products. The nonalcoholic beverages segment of the commercial beverages industry is highly competitive,
consisting of numerous firms. These include firms that, like our Company, compete in multiple geographic areas
as well as firms that are primarily local in operation. Competitive products include numerous nonalcoholic
sparkling beverages; various water products, including packaged water; juices and nectars; fruit drinks and
dilutables (including syrups and powdered drinks); coffees and teas; energy and sports drinks; and various other
nonalcoholic beverages. These competitive beverages are sold to consumers in both ready-to-drink and
not-ready-to-drink form. In many of the countries in which we do business, including the United States,
PepsiCo, Inc. is one of our primary competitors. Other significant competitors include, but are not limited to,
Nestl´
e, Cadbury Schweppes plc, Groupe Danone and Kraft Foods Inc. We also compete against numerous local
firms in various geographic areas in which we operate.
Competitive factors impacting 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.
Our competitive strengths include powerful 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. Our competitive challenges include strong competition in all geographic regions
and, in many countries, a concentrated retail sector with powerful buyers able to freely choose among 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, which 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, which 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 nutritive sweeteners. In the
United States, we purchase high fructose corn syrup to meet our and our bottlers’ requirements 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.
The principal non-nutritive sweeteners we use in our business are aspartame, acesulfame potassium,
saccharin, cyclamate and sucralose. Generally, these raw materials are readily available from numerous sources.
However, our Company purchases 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 sparkling beverage products, primarily from The NutraSweet Company and Ajinomoto Co., Inc.,
which we consider to be our only viable sources for the supply of this product. We currently purchase acesulfame
potassium from Nutrinova Nutrition Specialties & Food Ingredients GmbH, which we consider to be our only
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