Coca Cola 2011 Annual Report Download - page 84

THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
The Coca-Cola Company is the world’s largest beverage company. We own or license and market more than 500 nonalcoholic
beverage brands, primarily sparkling beverages but also a variety of still beverages such as waters, enhanced waters, juices and
juice drinks, ready-to-drink teas and coffees, and energy and sports drinks. We own and market four of the world’s top five
nonalcoholic sparkling beverage brands: Coca-Cola, Diet Coke, Fanta and Sprite. Finished beverage products bearing our
trademarks, sold in the United States since 1886, are now sold in more than 200 countries.
We make our branded beverage products available to consumers throughout the world through our network of Company-owned
or controlled bottling and distribution operations, bottling partners, distributors, wholesalers and retailers — the world’s largest
beverage distribution system. Of the approximately 56 billion beverage servings of all types consumed worldwide every day,
beverages bearing trademarks owned by or licensed to us account for more than 1.7 billion.
On October 2, 2010, we acquired the North American business of Coca-Cola Enterprises Inc. (‘‘CCE’’), one of our major bottlers,
consisting of CCE’s production, sales and distribution operations in the United States, Canada, the British Virgin Islands, the
United States Virgin Islands and the Cayman Islands, and a substantial majority of CCE’s corporate segment. Upon completion of
the CCE transaction, we combined the management of the acquired North American business with the management of our
existing foodservice business; Minute Maid and Odwalla juice businesses; North America supply chain operations; and Company-
owned bottling operations in Philadelphia, Pennsylvania, into a unified bottling and customer service organization called
Coca-Cola Refreshments (‘‘CCR’’). In addition, we reshaped our remaining Coca-Cola North America (‘‘CCNA’’) operations into
an organization that primarily provides franchise leadership and consumer marketing and innovation for the North American
market.
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.
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