Coca Cola 2014 Annual Report Download - page 9

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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.
Bottler’s Agreements Within the United States
During the year ended December 31, 2014, our Company-owned operations manufactured, sold and distributed 86 percent of our U.S.
unit case volume. The discussion below relates to Bottler’s Agreements and other contracts for territories in the United States that are
not covered by our Company-owned operations.
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 subject to
termination by the Company for nonperformance or upon the occurrence of certain defined events of default that may vary from
contract to contract.
Under the terms of the Bottler’s Agreements, bottlers in the United States are authorized to manufacture and distribute Company
Trademark Beverages in bottles and cans. However, these bottlers generally are not authorized to manufacture fountain syrups.
Rather, in the United States, our Company manufactures and sells fountain syrups to authorized fountain wholesalers (including
certain authorized bottlers) and some fountain retailers. These wholesalers in turn sell the syrups or deliver them on our behalf to
restaurants and other retailers.
Certain of the Bottler’s Agreements for cola-flavored sparkling beverages in effect in the United States give us complete flexibility to
determine the price and other terms of sale of concentrates and syrups for such Company Trademark Beverages. 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. Certain Bottler’s Agreements, entered into prior to 1987, provide for concentrates or syrups for certain Trademark Coca-Cola
Beverages and other cola-flavored Company Trademark Beverages to be priced pursuant to a stated formula. Bottlers that accounted
for 6.3 percent of total unit case volume in the United States in 2014 have contracts for certain Trademark Coca-Cola Beverages and
other cola-flavored Company Trademark Beverages with pricing formulas that generally provide for a baseline price. This baseline
price may be adjusted periodically by the Company, up to a maximum indexed ceiling price, and is adjusted quarterly based upon
changes in certain sugar or sweetener prices, as applicable. Bottlers that accounted for 0.3 percent of total unit case volume in the
United States in 2014 operate under our oldest form of contract, which provides for a fixed price for Coca-Cola syrup used in bottles
and cans. This price is subject to quarterly adjustments to reflect changes in the quoted price of sugar.
We have standard contracts with bottlers in the United States for the sale of concentrates and syrups for non-cola-flavored sparkling
beverages and certain still beverages in bottles and cans, and, in certain cases, for the sale of finished still beverages in bottles and cans.
All of these standard contracts give the Company complete flexibility to determine the price and other terms of sale.
In addition to the Bottler’s Agreements described above, in 2014, the Company and certain bottlers entered into comprehensive
beverage agreements (“CBAs”) under which the bottlers are authorized to purchase Company Trademark Beverages from the
Company or another supplier authorized by the Company and to distribute, promote, market and sell such beverages, on an