The Coca-Cola system is a hot topic

The Coca-Cola system is a hot topic

The Coca-Cola system was all over the Consumer Analyst Group Europe conference in London this week. As well as The Coca-Cola Co itself, we also had presentations from Coca-Cola HBC, Coca-Cola Enterprises (CCE) and Coca-Cola Icecek.

The small matter of the system's German bottling operations came up several times. The unit remains under the aegis of Coca-Cola Co after CCE let its right of first refusal lapse last year

Coca-Cola Co ensured the 'For Sale' was clear for all to see at the end of its session yesterday. “Germany is for sale,” said CFO Gary Fayard. “We're happy with it, but it's not a long-term investment for us.”

CCE, which is ideally placed geographically speaking, wouldn't be drawn on its future intentions, saying only that it would never pay over the odds to secure an asset. Meanwhile, Coca-Cola Icecek professed to be in the market for footprint expansion.

Despite this flutter, we're unlikely to see Icecek make a move for Germany. The Turkey-based bottler seems to prefer the high-growth, high-risk markets of Central Asia - as one industry observer told me: “They're literally operating in war zones”.

CCHBC could be in the running, as it needs to utilise acquisitions to fuel any sizeable future growth: It can't rely on the likes of Greece, Italy and Ireland forever.

The problem with Germany is that it is a market of low-growth and high-regulation, with difficult retailers and an aging population. And, since merging the country's bottlers into one entity in 2007, Coca-Cola Co has spent the last seven years improving the unit's operations and efficiency.

The German bottling operations don't seem to fit anyone's needs. It's not an improvable asset, it doesn't have a lot of growth and Germany is a hard place to operate. So, even if you're chasing unit case growth, Germany may be more of a headache than it's worth.

And yet, the bigger a bottler can become, the more leverage it will have with Coca-Cola Co. The more case units you sell, the more important you are in the conversation with the franchise company.

This might make a German purchase more of a more of a need-to-have than a nice-to-have in the near-term.