Andy Morton

just On Call - Coca-Cola Co boss dismisses China bump

By | 12 February 2013

Coca-Cola saw China Q4 volumes drop

Coca-Cola saw China Q4 volumes drop

The boss of The Coca-Cola Co has said a transition in China's economy, causing a slowdown, will in fact deliver long-term benefits for the group.

Coca-Cola chairman & CEO, Muhtar Kent, said in an analyst call today (12 February) that China is dragging as it moves from an export-led economy to one more balanced with consumer spending. “I think there were challenges in that transition initially ... but I think long-term it's going to be very beneficial for everyone,” Kent said.

In full-year results reported today, Coca-Cola saw Q4 volumes in China fall by 4%, though Kent said full-year volumes were still in mid-single digit growth. "We still expect the ongoing uncertainty in China to have a short-term impact on our industry and on our business," Kent said. He also blamed bad weather, a tough comparison from last year and a later Chinese New Year for the volumes drop. 

In Japan, Coca-Cola's Q4 volumes were down by 4%, and Kent warned that consumer sentiment will continue to be “muddled and volatile” in the country. 

Meanwhile, recent changes in Coca-Cola's relationship with its bottlers are “not seismic” but helping to keep the company's distribution network nimble and flexible, Kent said. He also said that moves such as Coca-Cola FEMSA's acquisition of a bottler in the Philippines and the planned merger of four Tokyo bottlers are “pro-active, not reactionary”.

A report last month claimed recent bottler M&A activity signals a new wave of refranchising for the year ahead.

Expert analysis

Coca-Cola Co, The in Soft Drinks (World )

The Coca-Cola Company, the world’s leading soft drinks company, has a stated aim to double its size over the 2010 to 2020 decade. However, with US sales on the decline and regular carbonates losing their appeal, the company needs growth to come in the BRIC countries and in low calorie drinks. In this report, Euromonitor International assesses The Coca-Cola Company’s chances of succeeding in its quest for growth.

Sectors: Company results, Emerging markets – BRIC, Soft drinks

Companies: Coca-Cola Co, FEMSA

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