Coca Cola 2007 Annual Report Download - page 17

Increase in cost, disruption of supply or shortage of raw and packaging materials could harm our business.
We and our bottling partners use various raw materials in our business, including high fructose corn syrup,
sucrose, aspartame, saccharin, acesulfame potassium, sucralose and orange juice concentrate, as well as packaging
materials such as polyethylene terephthalate (PET or plastic) for bottles and aluminum for cans. The prices for these
raw and packaging materials fluctuate depending on market conditions. Substantial increases in the prices for our or
our bottling partners’ raw and packaging materials, to the extent they cannot be recouped through increases in the
prices of finished beverage products, would increase our and the Coca-Cola system’s operating costs and could reduce
our profitability. Increases in the prices of our finished products resulting from higher raw and packaging material costs
could affect affordability in some markets and reduce Coca-Cola system sales. In addition, some of these raw materials,
such as aspartame, acesulfame potassium and sucralose, as well as some of the packaging containers, such as aluminum
cans, are available from a limited number of suppliers. We cannot assure you that we and our bottling partners will be
able to maintain favorable arrangements and relationships with these suppliers. An increase in the cost, a sustained
interruption in the supply, or a shortage of some of these raw materials, packaging materials or cans and other
containers that may be caused by a deterioration of our or our bottling partners’ relationships with suppliers, or by
events such as natural disasters, power outages, labor strikes or the like, could negatively impact our net revenues and
profits.
Changes in laws and regulations relating to beverage containers and packaging could increase our costs and reduce
demand for our products.
We and our bottlers currently offer nonrefillable, recyclable containers in the United States and in various other
markets around the world. Legal requirements have been enacted in various jurisdictions in the United States and
overseas requiring that deposits or certain ecotaxes or fees be charged for the sale, marketing and use of certain
nonrefillable beverage containers. Other beverage container-related deposit, recycling, ecotax and/or product
stewardship proposals have been introduced in various jurisdictions in the United States and overseas, and we
anticipate that similar legislation or regulations may be proposed in the future at local, state and federal levels, both in
the United States and elsewhere. Consumers’ increased concerns and changing attitudes about solid waste streams and
environmental responsibility and related publicity could result in the adoption of such legislation or regulations. If these
types of requirements are adopted and implemented on a large scale in any of the major markets in which we operate,
they could affect our costs or require changes in our distribution model, which could reduce our net operating revenues
or profitability. In addition, container-deposit laws, or regulations that impose additional burdens on retailers, could
cause a shift away from our products to retailer-proprietary brands, which could impact the demand for our products in
the affected markets.
Significant additional labeling or warning requirements may inhibit sales of affected products.
Various jurisdictions may seek to adopt significant additional product labeling or warning requirements relating to
the chemical content or perceived adverse health consequences of certain of our products. These types of requirements,
if they become applicable to one or more of our major products under current or future environmental or health laws or
regulations, may inhibit sales of such products. In California, a law requires that a specific warning appear on any
product that contains a component listed by the state as having been found to cause cancer or birth defects. The state
has initiated a regulatory process in which caffeine will be evaluated for listing under this law. This law recognizes no
generally applicable quantitative thresholds below which a warning is not required. If a component found in one of our
products, such as caffeine, is added to the list, or if the increasing sensitivity of detection methodology that may
become available under this law and related regulations as they currently exist, or as they may be amended, results in
the detection of an infinitesimal quantity of a listed substance in one of our beverages produced for sale in California,
the resulting warning requirements or adverse publicity could affect our sales.
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