Hong Kong, Feb. 5 - The growing success of Coca-Cola in the development of its still beverages business in China reached another milestone on January 31 with an agreement by COFCO Coca-Cola Beverages (CBL), one of the Coca-Cola key bottling groups in China, to acquire a 21% interest in Coca-Cola Bottlers Manufacturing Holdings (CCBMH), The Coca-Cola Company (TCCC) said today.
In 2003 as part of a strategy to broaden its product portfolio in China, and to increase its presence in the rapidly growing market in China for still beverages, TCCC established Coca-Cola Bottlers Manufacturing (Dongguan) (CCBM Dongguan) as the sole manufacturing entity in China for juice, juice drinks and teas of TCCC and its affiliates. More recently, CCBMH was formed as a wholly-owned subsidiary of TCCC to act as a holding company for CCBM Dongguan. CCBM Dongguan sells its entire output of juices, juice drinks, and tea products to the 35 Coca-Cola bottlers across China.
After the completion of the transaction, CBL will hold a 21% interest in CCBMH, while another key bottling partner, Swire Beverages, holds 41% and TCCC will hold 38%. The new structure in which both TCCC and its two main bottling groups in China are shareholders allows for more effective alignment of interests between TCCC and the key Coca-Cola bottling groups as all three parties will now be involved in both the manufacturing and distribution of still beverages products in China.
Mr. Paul Etchells, Deputy Group President of Coca-Cola Pacific, said, "Over the last 5 years, CCBM Dongguan, as the single national manufacturing entity for still beverages of TCCC and its affiliates, has been successful in helping our bottling partners in developing a sizeable still beverages business in China by achieving a very competitive manufacturing cost structure."
CCBM Dongguan has manufacturing locations across China, including at Dongguan, Suzhou, Ningbo, Shanghai, and Beijing, among other locations. In a number of these locations CCBM Dongguan employs state-of-the-art aseptic manufacturing technology.
"We are particularly pleased with this latest milestone in China because it further strengthens our relationship with our key bottling partners and this will give further impetus to the growth of our juice, juice drink and tea businesses in China," said Mr. Etchells.
The still beverages market in China has been growing rapidly in China and the Coca-Cola bottlers have been successful in capturing a significant share of this growth. In the juice drink category, in particular, the TCCC product, Minute Maid Pulpy Orange, manufactured by CCBMH and distributed by the Coca- Cola China bottlers, and noted for its good taste and orange pulp, has enjoyed very strong growth and is now a leading brand in the category. A 100% juice version of Minute Maid was recently launched and is also popular among Chinese consumers.