Coca Cola 2007 Annual Report Download - page 9

terms of sale of concentrates and syrups for Company Trademark Beverages. In some instances, we have agreed or
may in the future agree with the bottler with respect to concentrate pricing on a prospective basis for specified time
periods. Bottlers operating under the 1987 Contract accounted for approximately 91.8 percent of our Company’s total
U.S. concentrate sales for bottled and canned beverages in 2007, excluding direct sales by the Company of juice and
juice-drink products and other finished beverages (“U.S. bottle/can concentrate sales”). Certain other forms of U.S.
Bottler’s Agreements, entered into prior to 1987, provide for concentrates or syrups for certain Coca-Cola Trademark
Beverages and other cola-flavored Company Trademark Beverages to be priced pursuant to a stated formula. Bottlers
accounting for approximately 7.8 percent of U.S. bottle/can concentrate sales in 2007 have contracts for certain
Coca-Cola Trademark Beverages and other cola-flavored Company Trademark Beverages with pricing formulas that
generally provide for a baseline price. This baseline price may be adjusted periodically by the Company, up to a
maximum indexed ceiling price, and is adjusted quarterly based upon changes in certain sugar or sweetener prices, as
applicable. Bottlers accounting for the remaining approximately 0.4 percent of U.S. bottle/can concentrate sales in 2007
operate under our oldest form of contract, which provides for a fixed price for Coca-Cola syrup used in bottles and
cans. This price is subject to quarterly adjustments to reflect changes in the quoted price of sugar.
We have standard contracts with bottlers in the United States for the sale of concentrates and syrups for non-cola-
flavored sparkling beverages and certain still beverages in bottles and cans, and, in certain cases, for the sale of finished
still beverages in bottles and cans. All of these standard contracts give the Company complete flexibility to determine
the price and other terms of sale.
Under the 1987 Contract and most of our other standard beverage contracts with bottlers in the United States, our
Company has no obligation to participate with bottlers in expenditures for advertising and marketing. Nevertheless, at
our discretion, we may contribute toward such expenditures and undertake independent or cooperative advertising and
marketing activities. Some U.S. Bottler’s Agreements that predate the 1987 Contract impose certain marketing
obligations on us with respect to certain Company Trademark Beverages.
As a practical matter, our Company’s ability to exercise its contractual flexibility to determine the price and other
terms of sale of its syrups, concentrates and finished beverages under various agreements described above is subject,
both outside and within the United States, to competitive market conditions.
Significant Equity Method Investments and Company Bottling Operations
Our Company maintains business relationships with three types of bottlers:
• bottlers in which the Company has no ownership interest;
• bottlers in which the Company has invested and has a noncontrolling ownership interest; and
• bottlers in which the Company has invested and has a controlling ownership interest.
In 2007, 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 46 unconsolidated bottling, canning and
distribution operations for our products worldwide. These cost or equity method investees produced and distributed
approximately 54 percent of our worldwide unit case volume in 2007. Controlled and consolidated bottling operations
produced and distributed approximately 10 percent of our worldwide unit case volume in 2007. The remaining
approximately 11 percent of our worldwide unit case volume in 2007 was produced 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 capabilities 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 concentrate sales for our Company’s concentrate and syrup business. When this occurs, both
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