Some of Coke’s oldest markets outside of the American continent are in Europe; it has a mix of mature and developing beverage markets.
Market dynamics in Western Europe are largely similar to those seen in North America with volume pressure seen in both full-calorie and diet soft drinks.
In Eastern Europe, soft drink consumption per capita is usually much lower but competition from private label is increasing due to the rise of mass retailers.
In August, a very significant merger was announced that will consolidate three large bottlers into a dominant Western European Coke bottler.
The European Coke System
It is widely believed that the most important way for the Coca-Cola Company (NYSE:
With the announced merger in Europe, the number of large anchor bottlers in this geography will decrease from the current four to merely two: Coca-Cola
The CC European Partners merger also brings the Coca-Cola Company back as an equity partner into the business of Coca-Cola Enterprises, which used to control much of the North American bottling business prior to 2010. Post-merger, the Coca-Cola Company will own 18% of CC European Partners, with the shareholders of CC Iberian Partners owning 34% and the shareholders of CC Enterprises owning 48%. The latter will receive $14.50 in cash and one share of CCEP for each current CCE share.
Consolidating a mature market
In business, generally, there will be a strong impetus to consolidate once demand for a product decreases. It appears that this is what has happened in much of Western Europe. Demand for Coca-Cola products in many of the southern European countries has suffered from the prolonged economic crisis. In Northern Europe, meanwhile, consumer behavior has been impacted primarily by changing preferences.
When I wrote