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Coke sees int`l markets key to long-term growth

Last Updated: Wednesday, November 18, 2009 - 13:04

Atlanta: Coca-Cola Co (KO.N) said on Tuesday that international growth, cost savings, new marketing and innovation would be key as it plans to double its total system revenue by 2020.

The world`s largest soft drink maker provided specifics on Tuesday on how it hopes to double its revenue by that point -- a goal first mentioned on Monday, the first day of its investor meeting.

Company executives said they hope Coca-Cola and its bottlers can double their revenue to about $200 billion by 2020, up from roughly $100 billion now.

Of that $100 billion, roughly $32 billion is from Coca-Cola, with the remainder coming from the bottlers, which buy concentrate from Coke, bottle it and sell the final product.

As for the company itself, Coke said it expects about 60 percent of its incremental sales volume growth by 2020 to come from newer, emerging markets such as India and China, where people still drink relatively few soft drinks.
It expects 25 percent of its volume growth to come from developing markets like Mexico and South Africa, and 15 percent from developed markets like the United States and Japan.

Coke`s 2020 revenue growth target implies an annual rate slightly above its standard long-term target for a 5- to 6-percent increase, but analysts said the goal is reasonable.

Consumer Edge Research analyst William Pecoriello said the target was achievable, especially given Coca-Cola`s diverse geographic footprint.

"I think the biggest thing is Coke`s opportunity for global growth," Pecoriello said.

On the domestic front, where Coke`s rivalry with PepsiCo Inc (PEP.N) is about to heat up as the No. 2 soft drink maker prepares to acquire its largest bottlers, Pecoriello said Coke was working to improve its business through accelerated productivity and flexibility about distribution.
Turning around the US

U.S. carbonated soft drink sales were falling even before the recession slammed the brakes on consumer spending, as some consumers started moving toward drinks they saw as healthier, such as bottled water and teas.

John Brock, chief executive of Coca-Cola Enterprises Inc (CCE.N), which handles the bulk of Coke`s U.S. volume, said that as he looks to 2010, he hopes to stem several years of sales declines.

"Our real objective is to get it flat," Brock said, during a panel discussion of Coke bottler executives.

Coke`s plan to revitalize sales in its home market includes new marketing campaigns for its trademark cola, appealing to multicultural teenagers as well as women, who often buy a family`s groceries. Coke is also introducing new packages, such as a 16-oz bottle for 99 cents and multi-can packages.

New U.S. products include vitamin water zero, launching in the first quarter; a dairy-based drink called Vio; and Cascal, a sparkling beverage aimed at adults with flavours like Light Red, with notes of black currant, cherry and mirabelle, and White, flavoured with pear, apricot and magnolia.

Cascal, whose package is reminiscent of a wine bottle, is currently sold at Whole Foods Market Inc (WFMI.O).

Bureau Report

First Published: Wednesday, November 18, 2009 - 13:04

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