IUF | Coca-Cola Workers Network | Monthly : January 2007

US: West Tennessee Coca-Cola bottler to cease production

The Associated Press - UNION CITY, Tenn.

The Coca-Cola bottling company here will soon stop bottling beverages as the number of Coke bottlers continues to dwindle. The Union City Coca-Cola Bottling Co. in upper West Tennessee is one of about 75 bottling companies in the country that produces 6.5-ounce and 10-ounce reusable bottles and 20-ounce and 2-liter bottles. "I'm told (production will cease) at the end of the week, but they don't know for sure," said Newell Graham, owner and CEO. "It will be whenever we run out of materials." Plant officials cited increasing production costs as the reason for closing.
Eight people, or about a quarter of the staff, will lose their jobs. The company will continue to distribute Coke products received from plants in Nashville or Mississippi.

NICARAGUA: 8 months after the signature of the Collective Agreement union/Femsa relations improve

Daniel Reyes, General Secretary of SUT, Nicaragua

On 28 May 2006, the union "Sindicato Único de Trabajadores de Coca-Cola FEMSA" (SUT) representing 410 Coca-Cola workers in Nicaragua signed a new Collective Agreement with Femsa. The negotiation process lasted several months and the tensions with the company forced the union on a general strike. In June 2006, the union General Assembly communicated to members the gains secured in the new Agreement. SIREL, the information service of the IUF regional office for Latin America interviewed Daniel Reyes Sanchez, General Secretary of SUT.

To read the full article (in Spanish) from REL-UITA click here.

WEF: Isdell Says Kent Is Succession Candidate and outlines Coke's strategy in China

By Mary Jane Credeur and Kathleen Hays

Jan. 25 (Bloomberg) -- Coca-Cola Co. Chief Executive Officer E. Neville Isdell said newly promoted President Muhtar Kent is ``certainly'' a candidate to lead the world's largest soft-drink maker. Isdell also said that Coca-Cola will concentrate on expanding its reach in fast- growing countries including India and China. The company already has nearly 30 plants for manufacturing and distribution in China alone. ``China is already our fourth-largest market. Soon it will be No. 3,'' Isdell said.


Kent, the former head of the international unit who beat out marketing chief Mary Minnick, must first ``earn his spurs'' running Coca-Cola's day-to-day operations, Isdell said today in an interview.

Isdell, 63, hasn't said when he plans to retire. He came out of retirement in June 2004 to lead the Atlanta-based company, replacing Douglas Daft and becoming Coca-Cola's fourth CEO in the past decade. The company's growth has lagged behind PepsiCo Inc., which leads in noncarbonated drinks with Gatorade and Lipton tea.

``Certainly he would be a candidate, but you never take anything for granted,'' Isdell said from the World Economic Forum in Davos, Switzerland. ``No one is ever likely when you sit in my position. There are people who have advantages, and there are outsiders who could come in as well.''

Kent, 54, formerly led Coca-Cola's Asia unit that includes emerging countries such as China, which soon will be the company's third-largest market.

He was promoted in December to president and chief operating officer, making him the second-highest ranking executive at Coca- Cola and setting him up as Isdell's likely successor, said analysts including J.P. Morgan Securities Inc.'s John Faucher.

Kent has worked for Coca-Cola or its bottlers for almost 30 years.

Kent's promotion created the company's first succession plan since former Chairman and CEO Roberto Goizueta died suddenly of cancer in 1997. Then-president Douglas Ivester stepped in after Goizueta died, and he was replaced by Daft three years later.

Isdell was brought back from retirement to take the top job at Coca-Cola after sales and profit growth slowed under Daft.

Shortly after Isdell's appointment, then-president Steve Heyer left the company to take over as chief of Starwood Hotels & Resorts Worldwide Inc., the third-largest U.S. hotel operator.

Kent, the first president since Heyer, is a Turkish Muslim. He previously oversaw international operations that account for 80 percent of Coca-Cola's profit and $15 billion in sales.


Sales at Coca-Cola, which depends on soda for 80 percent of its volume, have increased an average of 3 percent over the past five years, while PepsiCo's sales have gained an average of 5 percent.

Coca-Cola must develop more new drinks such as Enviga, a sparkling green tea that Coca-Cola claims can help burn calories, the CEO said. Boosting sales of its top-selling Coca-Cola Classic soda also is a priority, he said.

Coca-Cola's global soft-drink volume rose 5 percent in the third quarter, the biggest gain in more than five years, because of World Cup soccer tournament promotions in Europe and increases in Russia, China and Brazil.

``The growth for Coca-Cola isn't over,'' Isdell said.

To contact the reporter on this story: Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net ; Kathleen Hays in Davos, Switzerland, at khays4@bloomberg.net
Last Updated: January 25, 2007

US: CCE likely to cut US jobs

USA : CCE va supprimer des emplois aux Etats-Unis

E. U.: CCE planea suprimir puestos de trabajo

Source: just-drinks.com

Coca-Cola Enterprises, the world's largest Coke bottler, could announce a swathe of job cuts in the US next month, according to local reports. The company is likely to provide more details on the cuts when it announces its results covering the last quarter of 2006 on 13 February, according to US industry newsletter Beverage Digest.
Sources told Beverage Digest the total number of jobs under threat is said to be around the “four-digit range”.

Earlier this month, the Teamsters trade union used an American football match in San Diego to launch protests against plans by Coca-Cola Enterprises to axe over 100 jobs in southern California.

To read a more detailed, recent article in English about this issue click here.

US: Coca-COla plans expansion at Baton Rouge plant, Louisiana

Baton Rouge Plant2.JPG

Baton Rouge Coca-Cola plans to break ground this summer on a new, expanded bottling plant near Metro Airport. Melanie Clark, a spokeswoman for the privately held company, said that, pending city-parish approval, the new facility could open by the end of 2008. The Coca-Cola plant produces the equivalent of about 3 million 8-ounce servings a day. Clark said the new facility will allow production to immediately expand by one-third. Once the new facility opens, the current plant will be sold.

The Baton Rouge facility supports markets from Lake Charles east to the Mississippi cities of Hattiesburg and McComb. The plant now sells more than 300 brands and packages to retail outlets, restaurants and businesses and has 470 employees. The plant produces the equivalent of about 3 million 8-ounce servings a day, which will be expanded by one-third at the new location. Clark said the plant will add workers, though there were no specific timetables.

FRANCE: Coca-Cola va investir 36 millions d’euros

FRANCE: CCE to invest 36m€ in production


Coca-Cola Entreprise va investir cette année 36 millions d’euros en France pour renforcer ses activités industrielles. Les investissements de 2007 sont essentiellement concentrés sur deux sites de production situés à Dunkerque (Nord) et à Pennes-Mirabeau (Bouches-du-Rhône). L'objectif est de répondre au développement du segment des boissons pour le sport et non gazeuses (Powerade, Minute Maid, Nesty, Aquarius).

Coca-Cola Entreprise investira ainsi 25 millions pour l’installation d’une 6e ligne de production aseptique (en atmosphère stérile) à Dunkerque. Ce site exporte une large part de sa production vers la Belgique, les Pays-Bas et le Luxembourg et c'est l’une des plus importantes usines au monde en terme de production de boîtes. Coca-Cola Entreprise investira également 11 millions pour la création d’une plate-forme de stockage sur son site de production à Pennes-Mirabeau afin de mieux desservir le sud de la France.

Avec 2.500 collaborateurs, 16 sites dont 5 usines de production, Coca-Cola Entreprise France, filiale du groupe américain, exerce une activité à la fois industrielle et commerciale de la réception des matières premières jusqu’aux points de vente. Près de 95% des boissons commercialisées en France par Coca-Cola Entreprise sont produites dans l’Hexagone.

De 2002 à 2006, Coca-Cola Entreprise a investi près de 120 millions d’euros en France, soit environ 20 millions par an. Ce qui en fait l’un des premiers investisseurs du secteur de l’agroalimentaire dans le pays.


IUF proposal to Coca-Cola for International Union Rights/Recognition Agreement

Proposition de l'UITA à Coca-Cola pour un accord international sur les droits et reconnaissance des syndicats

The IUF team has made a formal proposal to Coca-Cola for an International Union Rights/Recognition Agreement. The agreement will be discussed between the IUF team and the company for the first time at the next meeting on February 28 in Atlanta.

You can read and download the full proposal in the IUF languages by clicking the link corresponding to your language. You may need to enter your username and password again to view the document.


It is impossible for practical reasons to convene a meeting of our entire membership representing Coca-Cola workers world-wide. We are therefore testing a unique and potentially historic on-line consultation mechanism to assess the views and support of IUF affiliates representing Coca-Cola workers and local unions representatives in the company.

Please take part in this survey if you represent a union with Coca-Cola members or are a union representative or a worker in the company itself. To complete the survey in ENGLISH click on this link

Veuillez participer à ce sondage si vous représentez un syndicat avec des membres chez Coca-Cola, si vous êtes un représentant syndical ou un travailleur/euse chez Coca-Cola.

GERMANY: Coke bottler to create 300 sales jobs



Source: just-drinks.com

The Coca-Cola Co.’s largest bottler in Germany, Coca-Cola Erfrischungsgetränke (CCE AG), is set to create 300 sales jobs in an attempt to boost its business. CCE AG, which accounts for around 75% of Coke’s sales in Germany, plans to add 300 employees to its sales force in the next 18 months. The jobs will boost the bottler’s sales team by around 20%.

“We see major potential on the market for non alcoholic beverages which we want to tap by investing in our sales”, said Damian Gammell, chief executive of CCE AG.

“Individual and ongoing customer service is an important feature with which we want to distinguish from our competitors. With more sales reps we can have an even more intensive customer contact and further enhance a traditional strength of the Coca-Cola business to grow our business.”

Meanwhile, merger talks between Coke and seven independent bottlers in Germany are “still running”, a Coke spokesman told just-drinks today (19 January) from Berlin.

Last year, CCE AG and the bottlers signed a letter of intent to merge in an attempt to drive efficiency across the network.

The spokesman gave no indication as to when the talks were expected to conclude.

Soft-drink prices on the way up driven by higher commodities costs

splenda.jpgaluminum can.jpg

Source: Associated Press

Beverage consumers should expect to see higher prices for soft-drinks on U.S. store shelves this year. That's because of higher costs for aluminum, corn syrup, high fructose syrup, Splenda Sucralose low-calorie sweetener and concentrate. "As a result of these bottler cost increases, consumers will see soft drinks going up this year in the range of 4 percent or perhaps even a little bit more," said Sicher, editor and publisher of Beverage Digest.

Bottlers set prices on soft drinks on store shelves. Beverage makers like Coca-Cola and Pepsi set prices on the concentrate they provide to the bottlers.
Dan Schafer, a spokesman for The Coca-Cola Co., said the Atlanta-based company has been working on strategies to limit the potential impact to consumers of cost increases.
"Those are costs that will impact all the players in the industry, but when you look at the scale of our business, we think as a company we're well-positioned," Schafer said.

As for what beverage markers charge for concentrate, Sicher said, "They need to increase their revenues to both generate profit increases and to invest back in their brands."

Dave DeCecco, a spokesman for Purchase, N.Y.-based PepsiCo Inc., said money made from concentrate increases is reinvested in new products, packaging, marketing and strategic initiatives.

US: Coke marketing chief Minnick quits

Source: just-drinks.com

The Coca-Cola Co. has suffered a setback with the resignation of Mary Minnick, chief of marketing, strategy and innovation. Minnick, 47, has left the US beverage giant after 23 years at the company “to pursue a combination of professional and personal goals” in the UK. Speculation that Minnick would leave Coke started to build after the company named Muhtar Kent as president and chief operating officer late last year, making him the most likely successor to Coke chairman and CEO Neville Isdell. Under her leadership, the marketing, strategy and innovation team has launched numerous breakthrough brands, concepts, technologies, packages and adjacent businesses, including Coca-Cola Blak, Far Coast, Enviga and Gold Peak.Coke has yet to announce a successor to Minnick but is likely to name her replacement in the coming weeks.

FINLAND: Soft drinks withdrawn from school vending machines

vending machines.jpg

Source: just-drinks

Panimoliitto, Finland’s brewing and soft drinks industry central organisation, has agreed not to market soft drinks in the country to children under the age of 12. The body said today (16 January) that it has signed up to the Finnish government’s Child Obesity Initiative (COI). Coca-Cola Finland and PepsiCo Nordic Finland, who are not members of the organisation, have also signed up to the COI.

The initiative follows similar bans recently enacted in the UK and France. The withdrawal of Coke from the vending machines business in schools following increasing concern over health and obesity issues is having employment implications on Coke employees linked to these services.

Under Panimoliitto’s agreement with the Ministry of Health and Social Services, the industry has agreed to remove all soft drinks product ads from secondary school vending machines by the end of this year. The machines will subsequently offer a a selection consisting of a minimum of 50% sugar-free drinks and an increased choice of low-calorie drinks.

US: Teamsters' Union launches protest over Coke's union job elimination plan in Southern California



The Teamsters' Unions in the US have launched protests against plans by Coca-Cola Enterprises to axe over 100 jobs in southern California on occasion of an American football match in San Diego. The Teamsters union yesterday (14 January) chartered a plane to fly over the Qualcomm Stadium in San Diego with a streaming banner reading: “Powerade Wants San Diego to Lose” – a message referring to CCE’s planned job cuts in the US city and at other bottling and distribution sites in California. CCE is forcing the affected workers to re-apply for their jobs at the company’s new Oceanside site. The plans broke the workers’ “legal right” to transfer, the union said.
“Southern California workers have done their best by this company for decades, and this is no way to reward them,” said Teamsters international vice president Jack Cipriani.

To read the article from the Teamsters' union website, click here.

US: Coke, bottlers close to settling Powerade lawsuit

Coca-Cola is close to resolving a dispute with dozens of its bottlers in North America over a new distribution method by the soft drink giant that threatens bottlers' exclusive franchises they have held for decades.
The bottlers sued Coke and its chief bottler, Coca-Cola Enterprises, in February after the companies began shipping Powerade sports drink directly to Wal-Mart distribution centers. The warehouse deliveries bypassed a more than century-old franchise system under which bottlers sell directly to retail stores in their territory after purchasing concentrate from Coke.

Coke and CCE first tried warehouse delivery in 2004 for drinks sold to a California retailer. They have since used the method for flavored Dasani water sold to Cosco in Southern California and Minute Maid juices sold to a convenience store chain in Texas.

The settlement agreement, according to one of the plaintiffs, would allow warehouse deliveries "in certain circumstances" and govern them with a set of guidelines. The bottlers would get royalties on product shipped from distribution centers into stores in their franchise territories. The arrangement is similar to one Coke uses for distribution of bottled Dasani water to McDonald's, which delivers the product to its outlets by way of regional distribution centers. After the test period, which would be longer than a year, the agreement would be tweaked if needed and the lawsuit dropped. If the test fails and bottlers are still unhappy, they could then resume the lawsuit, the person said.

The Atlanta Journal-Constitution

The bottlers accused Coke of cutting them out of profits on drinks that eventually would end up at Wal-Mart stores within the bottlers' territories. Coke has argued the warehouse deliveries are a necessary option in a changing market increasingly dominated by big-box retailers who buy in bulk and rely on regional distribution centers.

Plaintiff Bob Browne, chairman and chief executive officer of Oklahoma-based Great Plains Coca-Cola, told The Atlanta Journal-Constitution that "there's a likelihood that we're close to an arrangement."

"We have a plan to go forward," said Browne. "We're trying to carve out a period of time that we can work together and carve out some kind of solution so it's a win-win for all of us... We're not calling each other names any more."

Browne declined to provide details of the proposed agreement. But another person familiar with the proposal said it would suspend the lawsuit for "a significant amount of time" while Coke and the bottlers test a compromise warehouse delivery system that would cut the bottlers in on the profits.

The settlement agreement, according to the person, would allow warehouse deliveries "in certain circumstances" and govern them with a set of guidelines. The bottlers would get royalties on product shipped from distribution centers into stores in their franchise territories. The arrangement is similar to one Coke uses for distribution of bottled Dasani water to McDonald's, which delivers the product to its outlets by way of regional distribution centers.

After the test period, which would be longer than a year, the agreement would be tweaked if needed and the lawsuit dropped. If the test fails and bottlers are still unhappy, they could then resume the lawsuit, the person said.

Coke system officials have been taking the proposed agreement to bottlers around the country for more than two weeks. The nearly 20 Coke Bottlers who aren't part of the suit are being asked to sign onto the agreement, as well, according to the person. The proposed settlement would presumably cover a similar lawsuit filed by another group of bottlers in Alabama.

Coca-Cola North America spokesman Dan Schafer would not confirm details of the settlement but he said discussions have been "productive and positive."

"We are hopeful they will lead to a resolution of the lawsuit," Schafer said.

The two sides agreed late last year to put aside heated rhetoric over the case and try to work out a settlement to avoid a costly court fight and restore peace within the Coke distribution system. Coke and its bottlers already have been stressed by conflict over product innovation and the system faces escalating costs of commodities such as aluminum and corn syrup sweetener. The proposed agreement clears the way for Coke, Coca-Cola Enterprises and the smaller bottlers to concentrate on outside challenges to the business.

The lawsuit, being fought in federal court in Atlanta, was the first filed by a large group of Coke bottlers since a mid-1980s dispute over the price of concentrate for Diet Coke. The bottlers in the current lawsuit represent about 10 percent of Coke's sales in the United States. Coca-Cola Enterprises handles roughly 77 percent of Coke's U.S. volume.

The plaintiffs have alleged that the warehouse distribution model violates a 1994 agreement between Coke and its bottlers over Powerade distribution. The bottlers have said direct store delivery, as it is called, is the best way to increase establish and keep brand loyalty because their sales representatives can better respond to local market conditions and establish personal relationships with individual retailers.

Coke has said direct store delivery is expensive and less effective when it comes to the growing assortment of niche products, such as tea, coffee, sports and energy drinks, that are driving industry growth.

At a industry conference hosted last month in New York by Beverage Digest, Coke's new President and Chief Operating Officer Muhtar Kent said "nimbleness" is important to Coke at a time when consumers increasingly demand a broader variety of carbonated and non-carbonated products.

"I think going forward we have to say to ourselves we need new models," Kent said, adding Coke and its bottlers need to look at distribution from an "entrepreneurial point of view."

Coke and Coca-Cola Enterprises (CCE) began warehouse deliveries of Powerade to Wal-Mart to better compete with PepsiCo's Gatorade, which controls more than 80 percent of the sports drink market, according to statistics compiled by industry newsletter Beverage Digest. In a June court filing, Coke officials said Wal-Mart has told them the new distribution method would double sales volume of Powerade at Wal-mart.

Coke and CCE first tried warehouse delivery in 2004 for drinks sold to a California retailer. They have since used the method for flavored Dasani water sold to Cosco in Southern California and Minute Maid juices sold to a convenience store chain in Texas.

Manila Times commentary: Why SanMig gave up on Coke

This article in business section of The Manila Times is interesting because while it recognizes CCBPI's poor sales performance and loss of market share under San Miguel, it also raises the issue of the amount of royalties paid to TCCC, where "Coke was making more money (about P4 billion) than San Miguel itself (about P150 million in 2006) despite declining sales volume for the Coca-Cola Beverage Group (CCBG)."

Why SanMig gave up on Coke
THE MANILA TIMES 8 January 2007
By Tony Lopez

SAN Miguel Corp. will sell its entire 65-percent stake in the local Coca-Cola Bottlers Co. of the Philippines Inc. (CCBPI) to the Coca-Cola Co. of Atlanta, Georgia.

Coca-Cola South Asia Holdings, wholly owned by Coca-Cola Atlanta, will pay San Miguel $590 million payable over five years, with $370 million initially, another $100 million in escrow money, $20 million after 18 months and $100 million by the fifth year.

The $590-million sale price can be reduced or increased, by up to the $100-million escrow amount, depending on the valuation of CCCBPI net assets. SMC had bought its 65 percent for $1 billion in 1997.

San Miguel is not expected to enter the soft-drinks market for three years after the sale though abroad, it now has a booming beverage and juice business.

CCBPI holds the Coca-Cola bottling franchise for the Philippines, bottling soft drinks such as Coke, Sprite, other soft drinks and distilled drinking water and powdered juices. CCBPI sales were P39.8 billion in 2005.

Coca-Cola Co. owns the Coke brand and held the remaining 35 percent in CCBPI.

Since two years ago, soft-drinks sales have been down. Operating income at CCBPI fell 63 percent in 2005 as sales of Coke, juice and water plunged 7 percent to P39.8 billion.

Volume was down 8 percent. In the nine months to September 2006, sales were down 12 percent and the peso revenue at P27.4 billion were below breakeven.

Cause of the rift between SMC and Coke is the horrendous 21-percent royalty fee based on gross sales at a time of declining soft drinks demand following the shift towards noncarbonated drinks like tea and water.

Coke was making more money (about P4 billion) than San Miguel itself (about P150 million in 2006) despite declining sales volume for the Coca-Cola Beverage Group (CCBG). Rival Pepsi-Cola has cut its royalty to just 8 percent from a similar 21 percent previously.

The market shifted to what are seen as healthier alternative drinks (like the tremendously popular C2 of the Gokongweis) and even coffee.

Coke is also losing ground to the much cheaper Pepsi and to Alfred Yao’s cheaper cola drinks at the low-end of the market. Also, people would rather load their cell phones than buy soft drinks.

CCBPI owns San Miguel’s three water brands, three powder juice brands and two ready-to-drink brands, along with SMC’s carbonated orange drinks and its ready-to-drink juice brands. All these were sold to Coke in September 2001. At that time, SMC had agreed to turn over all its water and beverage businesses to Coke.

The water and ready-to-drink juices and tea have taken off while Coke sales just kept plunging.

Coke is now banned in not a few places. Gov. Arnold Schwarzenegger does not allow the sale of the world famous cola in California high schools to fight obesity. The University of Michigan late 2005 suspended sales of Coke products in its three campuses over allegations the company permits human and environmental abuses abroad.

San Miguel had all along had a ready-to-drink tea but Atlanta took more than a year to decide to deploy its own. By that time, Gokongwei’s C2 tea has taken off mightily.

San Miguel had previously sold its Coke stake to Atlanta for $3 billion only to get it back years later, at half the price, enabling it to make a profit of at least $1 billion and leading to the formation of CCBPI with SMC managing it.

CCBPI owns subsidiaries that include Philippine Beverage Partners, Philippine Bottlers Inc., Cosmos Bottling Corp., Luzviminda Land Holdings, Marangal Properties and Philbev Realty Inc.


INDIA: Coke bottler in Bhutan buy talks

Source: just-drinks.com editorial team

Hindustan Coca-Cola Beverages (HCCB), Coca-Cola India’s bottling arm, is reportedly in talks to buy the bottling operations of Bhutan Beverages, its co-packer in Bhutan. A report in The Economic Times newspaper on Saturday (6 January) quoted a HCCB spokesperson who said talks were underway on a possible deal. “HCCB is currently re-negotiating the co-packing agreement [in Bhutan] which may include shifting of the bottling line closer to the markets it serves in India. However, the Bhutan bottler will continue to service the markets in Bhutan,” the spokesman told the paper.

Pakistan: As international protest escalates, union rejects management claims of "outside interference"

International pressure is growing as more and more unionists join the campaign against union-busting in Pakistan by sending protest messages to The Coca-Cola Company. [Click here to send a protest message!]

Faced with growing international pressure, the General Manager at the Coca-Cola Beverages Pakistan Limited (CCBPL) bottling plant in Karachi called on the Coca Cola Beverages Staff and Workers Union to end the involvement of "outside organizations" - meaning the IUF.

The union representatives rejected this request outright, replying that IUF is not an "outside organization" and asserting that: "We are the members of IUF and it is the responsibility of our international organization to support us and help us.:

In a clear demonstration of the fact that the right to IUF membership is a trade union right, the union representatives asserted that IUF is and will always be closely involved in their struggle: "We are in contact with IUF and we will not do anything without consulting IUF", they said.

The union has also made it clear that they want the IUF representative in Pakistan, Qamar ul Hassan , to be part of the union delegation in any further meetings with management.

San Miguel Corp sells its 65% stake in Coca-Cola Philippines to The Coca-Cola Company

After two years of uncertainty for the members of IUF-affiliated ACCUP, a deal has finally been made for San MIguel Corp's to sell its 65% stake in Coca-Cola Bottlers Philippines Inc (CCBPI) to The Coca-Cola Company.

CCBPI underwent a serious loss in profitability and market share after San Miguel Corp took over the operations from Coca-Cola Amatil (CCA) in July 2001. Over the past 5 years under San Miguel Corp has destroyed regular jobs and cut union membership by half in its outsourcing & casualization drive.

Here are two brief news items on the recent deal.

SMC sells Coca-Cola stake for $590m

By Jennifer B. Austria

Food and beverage giant San Miguel Corp. sold its 65 percent stake in Coca-Cola Bottlers Philippines Inc. to Atlanta-based Coca-Cola Co. for $590 million.

San Miguel, in a reply to Philippine Stock Exchange’s request for additional information on the transaction, said it decided to exit from Coca-Cola Bottlers “to provide the company longer-term commercial flexibility.”

San Miguel said the $590-million price tag was subject to adjustments resulting from the completion of the closing accounts of the Coca-Cola Group of Companies and provisions of the transition service agreement.

The agreement calls for San Miguel to continue providing Coca- Cola with certain services, including human resources for a maximum of 18 months to enable Coca-Cola to assume management of the local bottling company.

San Miguel also committed not to engage in the business of producing competing non-alcoholic beverages anywhere in the world for a period of three years and in the Philippines for five years.

It also cannot compete with Coca-Cola Bottlers in the Philippines for the production and sale of certain carbonated soft drinks, sports drinks, energy drinks and flavored water.

San Miguel and Coca-Cola last week announced that they had signed a definitive agreement for the sale of San Miguel’s 65 percent shareholding in Coca-Cola Bottlers.

Coca-Cola Bottlers is a jointly-owned bottling company that holds the Coca-Cola franchise in the Philippines. It includes Cosmos Bottling Corp. and Philippine Beverage Partners Inc.

Prior to the transaction, San Miguel was the majority shareholder with management control of Coca-Cola Bottlers. The Coca-Cola Co. owns the Coke brand and held the remaining 35 percent in CCBPI.

SanMiguel Signs Deal to Sell Soft Drink Arm to Coke Source: Reuters 28/12/2006

Manila, Dec 23 - San Miguel Corp., southeast Asia's largest food and drinks group, said on Saturday it has signed a deal to sell its entire 65 percent stake in its soft drinks arm to joint venture partner Coca Cola Co.

The deal, which San Miguel and Atlanta-based Coke said in a joint statement was still subject to certain conditions, would give the world's largest beverage firm full control of the Philippine bottler.

"The Coca-Cola Company and San Miguel Corp today announced that they have signed a definitive agreement for the sale of SMC's 65 percent shareholding in Coca-Cola Bottlers Philippines, Inc. (CCBPI)," the joint statement said.

The two-paragraph statement did not state how much San Miguel would get for its stake in CCBPI, one of the top 10 Coke bottlers in the world.

The Philippines' second-largest listed group told analysts last month the deal it was arranging with Coke would include a non-compete clause that would prevent it from selling carbonated products within five years after the sale was completed.

San Miguel has been in talks with its U.S.-based joint venture partner Coke since the second quarter to offload its stake in the local soft drink firm, which has been suffering from weak sales and demand in recent years partly due to a shift in consumer preferences to drinks such as tea.

In January to September, the Philippine bottler managed by San Miguel reported a 4 percent drop in nine-month sales from a year earlier.

CCBPI also owns Cosmos Bottling Corporation and mineral water and juice producer Philippine Beverage Partners, Inc.

San Miguel -- 20 percent-owned by Japan's Kirin Brewery Co. and nearly 11 percent by Philippine conglomerate SM Investments Inc. - dominates the local market for beer, soft drinks, liquor, processed meat, poultry, and dairy products.

PHILIPPINES: Coke to pay US$590m to buy bottler

Source: just-drinks.com editorial team

The Coca-Cola Co. has taken full control of its bottler in the Philippines after buying out venture partner San Miguel Corp. Coke will pay the Philippines conglomerate US$590m over five years for its 65% shareholding in Coca-Cola Bottlers Philippines (CCBPI). The deal gives Coke 100% of a bottler that has seen sales and earnings fall in recent months due in part to rising raw material costs.

A Coke spokesman in Atlanta said the US-based soft drinks giant wanted greater control of the bottling of its products in what is a “top 10 market” for the company.
“We want to improve the efficiency of our business in that market,” the spokesman said, adding that it was “too early” to gauge why the CCBPI business had suffered.
The agreement, first announced on 27 December, brings an end to months of talks between Coke and San Miguel over the future of the venture