Coca Cola 2007 Annual Report Download - page 7

attributable to sales of beverage concentrates and syrups to 76 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 2007 U.S. concentrate sales was attributable to fountain syrups sold to
fountain retailers and to 491 authorized fountain wholesalers, some of which are authorized bottlers. The remaining
approximately 11 percent of 2007 U.S. concentrate 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 48 percent of the Company’s U.S.
concentrate sales in 2007. At December 31, 2007, our Company held an ownership interest of approximately
35 percent in CCE, which is the world’s largest bottler of Company Trademark Beverages.
In 2007, concentrate sales outside the United States represented approximately 76 percent of the Company’s
worldwide concentrate sales. The countries outside the United States in which our concentrate sales were the largest in
2007 were Mexico, Brazil, China and Japan, which together accounted for approximately 28 percent of our worldwide
concentrate sales. Approximately 90 percent of non-U.S. unit case volume for 2007 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 490 licensed territories. Approximately 5 percent of 2007 non-U.S. unit
case volume was attributable to fountain syrups. The remaining approximately 5 percent of 2007 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 $4.1 billion in 2007.
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 the territory, and (2) to prepare, package,
distribute and sell such beverages in the territory, in any other manner or form. Territorial restrictions on bottlers vary
in some cases in accordance with local law.
Being a bottler does not create a legal partnership or joint venture between us and our bottlers. Our bottlers are
independent contractors and are not our agents.
The Bottler’s Agreements between us and our authorized bottlers in the United States differ in certain respects
from those in the other countries in which Company Trademark Beverages are sold. As further discussed below, the
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