Beverage giant Coca-Cola’s operations in China have become “lighter”.
On January 3, 2023, according to the announcement issued by China Foods Co., Ltd. (a major shareholder of COFCO Coca-Cola) and Swire Pacific, the transaction for the acquisition of Coca-Cola’s non-carbonated beverage business in China was completed on January 1, 2023. China Foods stated that after the completion of the transaction, the target company will become a subsidiary of China Foods, and its financial performance will be comprehensively included in the financial statements of the company of the group.
The deal agreement was disclosed as early as July 2022. According to the agreement, The Coca-Cola Company and its Chinese bottling partners, Swire Coca-Cola Co., Ltd. and COFCO Coca-Cola Beverages Co., Ltd., will transfer the still beverage business of the original Coca-Cola Bottler Production Holdings Co., Ltd. Operation, split and merged into Swire Coca-Cola Co., Ltd. and COFCO Coca-Cola Beverage Co., Ltd.
Jiemian News obtained an announcement from Swire Coca-Cola that the equity change will realize the regional production of Coca-Cola China’s still beverage business, optimize production management efficiency, improve supply chain synergy, and help accelerate production deployment. , The launch of new products enables the Coca-Cola China system to better provide consumers with high-quality beverage choices that are close to their needs.
In addition, the equity change will not affect market supply and consumers in various regions.
The acquisition of Coca-Cola Bottling Production Holdings Co., Ltd. is held by three parties: Coca-Cola South Asia Holdings, Coca-Cola China Industrial (a direct or indirect wholly-owned subsidiary of Coca-Cola), Xingju (a wholly-owned subsidiary of Swire), COFCO Beverage (COFCO Coca-Cola Wholly-owned subsidiaries) hold 38%, 41%, and 21% respectively.
The business involved in this transaction includes Coca-Cola China’s non-carbonated beverage production companies and branches located in 13 cities, including functional water, fruit juice, tea beverages, dairy beverages and coffee, which are bottled by the provinces in mainland China The dealer is responsible for distribution. The main brands include Minute Maid, Shuidongle, Chunyue, Chunchashe, Costa (bottled drinks), etc.
According to the announcement, Swire Coca-Cola will acquire Coca-Cola bottlers in Nanning, Hangzhou, Foshan, Wuhan, Dongguan and Suzhou. COFCO Coca-Cola will acquire Coca-Cola bottlers in Yingkou, Jinan, Changsha, Shijiazhuang and Chengdu.
The completion of this transaction also means that Coca-Cola has further optimized its bottling business.
Not only in China, but on a global scale, Coca-Cola’s bottling business is basically licensed to local producers for production. Coca-Cola, as a giant in the beverage industry, puts more energy into the promotion of brand management, the production and operation of concentrates, such businesses with higher profit margins.
On the one hand, this will allow Coca-Cola to take an asset-light route globally, and on the other hand, it will also objectively expand the scale of bottlers, thereby reducing the cost pressure brought about by the reduction in raw material procurement scale after increasing SKUs. According to Coca-Cola’s plan, the company will make 100% of its bottling business a franchise in the future, and its business model will be brand globalization and business localization.
Specific to the completion of the still beverage business transaction this time, it will also change the production mode of many products such as Minute Maid, Chun Tea House, and Costa Costa’s ready-to-drink coffee, allowing Swire and COFCO to have more say. The transaction will change the previous mode of centralized production and local distribution, and realize the regional production of Coca-Cola China excluding its beverage business. In other words, the two partners can have the right to make decisions about the production of still beverages, without having to wait for a unified supply.
Still beverages are an important part of Coca-Cola’s “full-category beverage” strategy.
In the Chinese market, Coca-Cola is also continuously expanding new products and businesses such as dairy products, ready-to-drink coffee, and tea beverages. For example, it will enter the herbal tea market in 2022 and launch a herbal tea product called “Prunella vulgaris”; it will cooperate with Mengniu in 2021 Launched Fresh Fille low-temperature milk brand and so on.
Coca-Cola’s financial report data for the third quarter of 2022 shows that sales of nutritional drinks, fruit juice drinks, dairy products, and plant-based beverages were flat compared to the previous year. , Maaza in India and fairlife in the U.S. led growth.” In addition, drinking water, sports drinks, coffee and tea increased by 5%.
This article comes from ” Interface News “, author: Ma Yue, editor: Ya Hanxiang, 36 Krypton is authorized to publish.
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