Coca Cola 2008 Annual Report Download - page 17

business opportunities or products other than those of the Company. Such actions could, in the long run, have
an adverse effect on our profitability. In addition, the loss of one or more major customers by one of our major
bottling partners, or disruptions of bottling operations that may be caused by strikes, work stoppages or labor
unrest affecting such bottling partners, could indirectly affect our results.
If our bottling partners’ financial condition deteriorates, our business and financial results could be affected.
We derive a significant portion of our net operating revenues from sales of concentrates and syrups to our
bottling partners and, therefore, the success of our business depends on our bottling partners’ financial strength
and profitability. While under our bottling partners’ agreements we generally have the right to unilaterally
change the prices we charge for our concentrates and syrups, our ability to do so may be materially limited by
our bottling partners’ financial condition and their ability to pass price increases along to their customers. In
addition, we have investments in certain of our bottling partners, which we account for under the equity method,
and our operating results include our proportionate share of such bottling partners’ income or loss. Our bottling
partners’ financial condition is affected in large part by conditions and events that are beyond our control,
including competitive and general market conditions in the territories in which they operate and the availability
of capital and other financing resources on reasonable terms. A deterioration of our bottling partners’ financial
condition or results of operations because of adverse competitive, general economic or capital market
conditions, or due to other unfavorable developments, could adversely affect our net operating revenues from
sales of concentrates and syrups; could result in a decrease in our equity income from equity-method
investments; and could negatively affect the carrying values of such investments, resulting in asset write-offs.
If we are unable to renew collective bargaining agreements on satisfactory terms, or we or our bottling partners experience
strikes, work stoppages or labor unrest, our business could suffer.
Many of our associates at our key manufacturing locations and bottling plants are covered by collective
bargaining agreements. If we are unable to renew such agreements on satisfactory terms, our labor costs could
increase, which would affect our profit margins. In addition, many of our bottling partners’ employees are
represented by labor unions. Strikes, work stoppages or other forms of labor unrest at any of our major
manufacturing facilities or at our major bottlers’ plants could impair our ability to supply concentrates and
syrups to our bottling partners or our bottlers’ ability to supply finished beverages to customers, which would
reduce our revenues and could expose us to customer claims.
Increase in the cost, disruption of supply or shortage of energy could affect our profitability.
Our Company-owned bottling operations and our bottling partners operate a large fleet of trucks and other
motor vehicles. In addition, we and our bottlers use a significant amount of electricity, natural gas and other
energy sources to operate our concentrate and bottling plants. An increase in the price, disruption of supply or
shortage of fuel and other energy sources that may be caused by increasing demand or by events such as natural
disasters, power outages or the like would increase our and the Coca-Cola system’s operating costs and,
therefore, could negatively impact our profitability.
Increase in cost, disruption of supply or shortage of ingredients or packaging materials could harm our business.
We and our bottling partners use various ingredients in our business, including high fructose corn syrup,
sucrose, aspartame, saccharin, acesulfame potassium, sucralose, ascorbic acid, citric acid, phosphoric acid 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 ingredients and packaging materials fluctuate depending on
market conditions. Substantial increases in the prices for our or our bottling partners’ ingredients 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 ingredient and packaging material costs could affect
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