Coca Cola 2011 Annual Report Download - page 5

• ‘‘Company Trademark Beverages’’ means beverages bearing our trademarks and certain other beverage products bearing
trademarks licensed to us by third parties for which we provide marketing support and from the sale of which we derive
economic benefit; and
• ‘‘Trademark Coca-Cola Beverages’’ or ‘‘Trademark Coca-Cola’’ means beverages bearing the trademark Coca-Cola or any
trademark that includes Coca-Cola or Coke (that is, Coca-Cola, Diet Coke and Coca-Cola Zero and all their variations and
line extensions, including Coca-Cola Light, caffeine free Diet Coke, Cherry Coke, etc.). Likewise, when we use the
capitalized word ‘‘Trademark’’ together with the name of one of our other beverage products (such as ‘‘Trademark Fanta,’’
‘‘Trademark Sprite’’ or ‘‘Trademark Simply’’), we mean beverages bearing the indicated trademark (that is, Fanta, Sprite or
Simply, respectively) and all its variations and line extensions (such that ‘‘Trademark Fanta’’ includes Fanta Orange, Fanta
Zero Orange and Fanta Apple; ‘‘Trademark Sprite’’ includes Sprite, Diet Sprite, Sprite Zero and Sprite Light; and
‘‘Trademark Simply’’ includes Simply Orange, Simply Apple and Simply Grapefruit).
Our Company markets, manufactures and sells:
• beverage concentrates, sometimes referred to as ‘‘beverage bases,’’ and syrups, including fountain syrups (we refer to this
part of our business as our ‘‘concentrate business’’ or ‘‘concentrate operations’’); and
• finished sparkling and still beverages (we refer to this part of our business as our ‘‘finished products business’’ or ‘‘finished
products operations’’).
Generally, finished products operations generate higher net operating revenues but lower gross profit margins than concentrate
operations.
In our concentrate operations, we typically generate net operating revenues by selling concentrates and syrups to authorized
bottling and canning operations (to which we typically refer as our ‘‘bottlers’’ or our ‘‘bottling partners’’). Our bottling partners
either combine the concentrates with sweeteners (depending on the product), still water and/or sparkling water, or combine the
syrups with sparkling water to produce finished beverages. The finished beverages are packaged in authorized containers bearing
our trademarks or trademarks licensed to us — such as cans and refillable and nonrefillable glass and plastic bottles — and are
then sold to retailers directly or, in some cases, through wholesalers or other bottlers. Outside the United States, we also sell
concentrates for fountain beverages to our bottling partners who are typically authorized to manufacture fountain syrups, which
they sell to fountain retailers such as restaurants and convenience stores which use the fountain syrups to produce beverages for
immediate consumption, or to fountain wholesalers who in turn sell and distribute the fountain syrups to fountain retailers.
Our finished products operations consist primarily of the production, sales and distribution operations managed by CCR and our
Company-owned or controlled bottling and distribution operations. CCR is included in our North America operating segment, and
our Company-owned or controlled bottling and distribution operations are included in our Bottling Investments operating
segment. Our finished products operations generate net operating revenues by selling sparkling beverages and a variety of still
beverages, such as juices and juice drinks, energy and sports drinks, ready-to-drink teas and coffees, and certain water products, to
retailers or to distributors, wholesalers and bottling partners who distribute them to retailers. In addition, in the United States, we
manufacture fountain syrups and sell them to fountain retailers, such as restaurants and convenience stores who use the fountain
syrups to produce beverages for immediate consumption, or to authorized fountain wholesalers or bottling partners who resell the
fountain syrups to fountain retailers. In the United States, we authorize wholesalers to resell our fountain syrups through
nonexclusive appointments that neither restrict us in setting the prices at which we sell fountain syrups to the wholesalers nor
restrict the territories in which the wholesalers may resell in the United States.
For information about net operating revenues and unit case volume related to our concentrate operations and finished products
operations, respectively, refer to the heading ‘‘Our Business — General’’ in Part II, ‘‘Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations’’ of this report, which is incorporated herein by reference.
Most of our branded beverage products, particularly outside of North America, are manufactured, sold and distributed by
independently owned and managed bottling partners. However, from time to time we acquire or take control of bottling or
canning operations, often in underperforming markets where we believe we can use our resources and expertise to improve
performance. Owning such a controlling interest enables us to compensate for limited local resources; help focus the bottler’s sales
and marketing programs; assist in the development of the bottler’s business and information systems; and establish an appropriate
capital structure for the bottler. The Company-owned or controlled bottling operations, other than those managed by CCR, are
included in our Bottling Investments group.
In line with our long-term bottling strategy, we may periodically consider options for reducing our ownership interest in a
Bottling Investments group bottler. One such option is to combine our bottling interests with the bottling interests of others to
form strategic business alliances. Another option is to sell our interest in a bottling operation to one of our other bottling
3