Coca Cola 2013 Annual Report Download - page 8

In 2013, these five bottling partners combined represented 34 percent of our total unit case volume.
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.
In our finished product operations we typically sell finished beverages to retailers directly or to distributors, wholesalers and
bottling partners who in turn distribute them to retailers. In addition, in the United States our finished product operations’
customers include fountain retailers, such as restaurants and convenience stores who use the fountain syrups for immediate
consumption, and fountain wholesalers or bottling partners who resell the fountain syrups to fountain retailers.
Bottler’s Agreements
We have separate contracts (‘‘Bottler’s Agreements’’) with 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 Company
Trademark Beverages in such containers in the territory for sale outside the territory, (2) to prepare, package, distribute and sell
such Company Trademark Beverages in the territory in any other manner or form (territorial restrictions on bottlers vary in some
cases in accordance with local law), and (3) to handle certain key accounts (accounts that cover multiple territories).
While 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. In addition, in some instances 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. Also, 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.
Under our Bottler’s Agreements, 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.
As further discussed below, our Bottler’s Agreements for territories outside of the United States differ in some respects from our
Bottler’s Agreements for territories within the United States.
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.
6