The Coca-Cola Co is taking a stake in Coca-Cola Amatil's Indonesian unit

The Coca-Cola Co is to pay US$500m for a minority stake in Coca-Cola Amatil's Indonesian unit as it aims to reverse falling demand for its brands in the South-East Asian country. 

Coca-Cola will receive a 29.4% interest in Coca-Cola Amatil Indonesia (CCAI), Coca-Cola Amatil said in a statement to the Australian stock exchange today. The investment will fund an expansion of CCAI's production as well as new warehouses and infrastructure.

Coca-Cola Amatil saw EBIT in its Indonesia & Papua New Guinea plunge 83% in H1 results released in August as increased competition and currency depreciation stifled demand. Today's announcement is the result of a strategic review of its operations launched under CEO Alison Watkins. 

Coca-Cola Amatil is Coca-Cola's exclusive bottler in Indonesia and is 29% owned by the US company. 

Watkins said today: “With a population of more than 240m and a fast-growing emerging middle class, Indonesia is a key growth market for CCA.”

Under the agreement, Amatil will retain management and operational control of CCAI. The proposed new board of commissioners of CCAI will comprise three Amatil nominees, including the chairman, and two nominees of Coca-Cola.