Coca Cola 2013 Annual Report Download - page 17

Increase in the cost, disruption of supply or shortage of energy or fuels could affect our profitability.
CCR, our North America bottling and customer service organization, and our other Company-owned or -controlled bottlers
operate a large fleet of trucks and other motor vehicles to distribute and deliver beverage products to customers. In addition, we
use a significant amount of electricity, natural gas and other energy sources to operate our concentrate plants and the bottling
plants and distribution facilities operated by CCR and our other Company-owned or -controlled bottlers. An increase in the price,
disruption of supply or shortage of fuel and other energy sources in North America, in other countries in which we have
concentrate plants, or in any of the major markets in which CCR and our other Company-owned or -controlled bottlers operate
that may be caused by increasing demand or by events such as natural disasters, power outages, or the like could increase our
operating costs and negatively impact our profitability.
Our independent bottling partners also operate large fleets of trucks and other motor vehicles to distribute and deliver beverage
products to their own customers and use a significant amount of electricity, natural gas and other energy sources to operate their
own bottling plants and distribution facilities. Increases in the price, disruption of supply or shortage of fuel and other energy
sources in any of the major markets in which our independent bottling partners operate would increase the affected independent
bottling partners’ operating costs and could indirectly negatively impact our results of operations.
Increase in the cost, disruption of supply or shortage of ingredients, other raw materials or packaging materials could harm our
business.
We and our bottling partners use various ingredients in our business, including HFCS, sucrose, aspartame, saccharin, acesulfame
potassium, sucralose, ascorbic acid, citric acid, phosphoric acid and caramel color, other raw materials such as orange and other
fruit juice and juice concentrates, as well as packaging materials such as PET for bottles and aluminum for cans. The prices for
these ingredients, other raw materials and packaging materials fluctuate depending on market conditions. Substantial increases in
the prices of our or our bottling partners’ ingredients, other raw materials 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 a higher cost of
ingredients, other raw materials and packaging materials could affect affordability in some markets and reduce Coca-Cola system
sales. In addition, some of our ingredients, such as aspartame, acesulfame potassium, sucralose, saccharin and ascorbic acid, as
well as some of the packaging containers, such as aluminum cans, are available from a limited number of suppliers, some of which
are located in countries experiencing political or other risks. We cannot assure you that we and our bottling partners will be able
to maintain favorable arrangements and relationships with these suppliers.
The citrus industry is subject to disease and the variability of weather conditions, which affect the supply of orange juice and
orange juice concentrate, which are important raw materials for our business. In particular, freezing weather or hurricanes in
central Florida may result in shortages and higher prices for orange juice and orange juice concentrate throughout the industry. In
addition, greening disease is reducing the number of trees and increasing grower costs and prices. Adverse weather conditions may
affect the supply of other agricultural commodities from which key ingredients for our products are derived. For example, drought
conditions in certain parts of the United States may negatively affect the supply of corn, which in turn may result in shortages of
and higher prices for HFCS.
An increase in the cost, a sustained interruption in the supply, or a shortage of some of these ingredients, other raw materials,
packaging materials or cans and other containers that may be caused by a deterioration of our or our bottling partners’
relationships with suppliers; by supplier quality and reliability issues; or by events such as natural disasters, power outages, labor
strikes, political uncertainties or governmental instability, or the like could negatively impact our net revenues and profits.
Changes in laws and regulations relating to beverage containers and packaging could increase our costs and reduce demand for our
products.
We and our bottlers currently offer nonrefillable, recyclable containers in the United States and in various other markets around
the world. Legal requirements have been enacted in various jurisdictions in the United States and overseas requiring that deposits
or certain ecotaxes or fees be charged in connection with the sale, marketing and use of certain beverage containers. Other
proposals relating to beverage container deposits, recycling, ecotax and/or product stewardship have been introduced in various
jurisdictions in the United States and overseas, and we anticipate that similar legislation or regulations may be proposed in the
future at local, state and federal levels, both in the United States and elsewhere. Consumers’ increased concerns and changing
attitudes about solid waste streams and environmental responsibility and the related publicity could result in the adoption of such
legislation or regulations. If these types of requirements are adopted and implemented on a large scale in any of the major
markets in which we operate, they could affect our costs or require changes in our distribution model, which could reduce our net
operating revenues or profitability.
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