Coca Cola 2011 Annual Report Download - page 8

Unit case volume outside the United States represented approximately 80 percent of the Company’s worldwide unit case volume
for 2011. The countries outside the United States in which our unit case volumes were the largest in 2011 were Mexico, China,
Brazil and Japan, which together accounted for approximately 31 percent of our worldwide unit case volume. Of the non-U.S. unit
case volume for 2011, approximately 77 percent was attributable to sparkling beverages and approximately 23 percent to still
beverages. Trademark Coca-Cola Beverages accounted for approximately 49 percent of non-U.S. unit case volume for 2011.
In our concentrate operations, we typically sell concentrates and syrups to our bottling partners, who use the concentrate to
manufacture finished 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.
While, as described below, under most of our Bottler’s Agreements we generally have complete flexibility to determine the price
and other terms of sale of the concentrates and syrups we sell to our bottlers, 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
is subject, both outside and within the United States, to competitive market conditions.
Bottler’s Agreements Outside the United States
The Bottler’s Agreements between us and our authorized bottlers outside the United States generally are of stated duration,
subject in some cases to possible extensions or renewals of the term of the contract. Generally, these contracts are subject to
termination by the Company following the occurrence of certain designated events. These events include defined events of default
and certain changes in ownership or control of the bottler.
In certain parts of the world outside the United States, we have not granted comprehensive beverage production rights to the
bottlers. In such instances, we or our authorized suppliers sell Company Trademark Beverages to the bottlers for sale and
distribution throughout the designated territory, often on a nonexclusive basis. Most of the Bottler’s Agreements in force between
us and bottlers outside the United States authorize the bottlers to manufacture and distribute fountain syrups, usually on a
nonexclusive basis.
Our Company generally has complete flexibility to determine the price and other terms of sale of the concentrates and syrups we
sell to bottlers outside the United States. In some instances, however, we have agreed or may in the future agree with a bottler
with respect to concentrate pricing on a prospective basis for specified time periods. In some markets, in an effort to allow our
Company and our bottling partners to grow together through shared value, aligned incentives and the flexibility necessary to meet
consumers’ always changing needs and tastes, we worked with our bottling partners to develop and implement an incidence-based
pricing model for sparkling and still beverages. Under this model, the concentrate price we charge is impacted by a number of
factors, including, but not limited to, bottler pricing, the channels in which the finished products are sold and package mix.
Outside the United States, in most cases, we have no obligation to provide marketing support to the bottlers. Nevertheless, we
may, at our discretion, contribute toward bottler expenditures for advertising and marketing. We may also elect to undertake
independent or cooperative advertising and marketing activities.
Bottler’s Agreements Within the United States
During the year ended December 31, 2011, CCR, our bottling and customer service organization for North America,
manufactured, sold and distributed approximately 87 percent of our unit case volume in the United States. The discussion below
regarding the terms of Bottler’s Agreements and other contracts relates to Bottler’s Agreements and contracts for territories in
the United States that are not covered by CCR.
In the United States, with certain very limited exceptions, the Bottler’s Agreements for Trademark Coca-Cola Beverages and
other cola-flavored beverages have no stated expiration date. Our standard contracts for other sparkling beverage flavors and
for still beverages are of stated duration, subject to bottler renewal rights. The Bottler’s Agreements in the United States are
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