To improve the efficiency and scale of its local partners, the world’s largest beverage group The Coca-Cola Co signed an agreement on Saturday [19 November 2016] to refranchise all its bottling operations in China, in a move to return its focus to the company’s core strengths, said senior executives…Full Article: China Daily Nov 2016

Key Point

  • Coca-Cola will refranchise its Chinese bottling operations with COFCO Corp and The Swire Group. Both of these companies have been working with Coca-Cola since 1979, when the soft drink maker first returned to China.

ChinaAg Comments

  • In China, Sprite, Coca-Cola, and Fanta are the primary drivers of growth for the Coca-Cola Company.
  • In August 2016, China Foods (subsidiary of COFCO) announced it may sell its stakes in 10 Coca-Cola bottling plants. China Foods’ Coca-Cola bottling operations are primarily located in northern China (e.g. Beijing and Hebei Province). At the same time, Swire Pacific manages 11 factories, including factories located in the provinces of Guangdong and Fujian.
  • In July 2016, some Coca-Cola products were found to contain high levels of benzoic acid, a food additive/preservative that inhibits bacterial growth and can cause health problems if consumed over a long period of time. The Guangdong-based importer and distributor, Shenzhen Lanka Industry, withdrew affected products from its inventory.
  • In April 2016, Coca-Cola began construction of a factory to produce Coca-Cola, Sprite, Fanta, Ice Dew and Ice Dew Chunyue water in Kunming, Yunnan Province.
  • In September 2015, Gansu province’s Lanzhou Environmental Protection Bureau accused the COFCO-Coca Cola factory of forging its water pollution output by manipulating sewage sample data collection. During the same month, Coca-Cola announced it would invest US$4 billion in China over a three year period.
  • In April 2015, Coca-Cola acquired China Culiangwang Beverages (fruit and vegetable drink producer) via the China Green Group for US$400 million. China Culiangwang Beverages Holdings Ltd is based in Hong Kong.
  • As of 2014, Coca-Cola has 43 factories in China and has invested US$9 billion in the country since 1979.
  • In June 2014, Coca-Cola began construction in Harbin, Heilongjiang province, on a factory will that have nine production lines (sparkling and still beverages) and a total capacity of 1.2 million ton per year. The first phase of construction is expected to be completed in 2016.
  • In 2005, Coca-Cola introduced Minute Maid Pulpy in China. This made-in-China product became a billion dollar brand by 2010.
  • In 1994, Coca Cola built its first factory in Heilongjiang province in Harbin’s Economic-Technological Development Zone and as of 2014, the factory has three production lines (including Coca-Cola, Sprite, Fanta and Ice Dew) and a capacity of 190,000 tons per year.
  • Founded in 1990 and headquartered in Hong Kong, China Foods (a subsidiary of COFCO – HKG:0506) is a food processor known for its distribution of wine, soft drinks, edible oils, and candy. In 2012, China Foods’ wine portfolio accounted for 57% of its net profit.
  • Founded in 1816 and headquartered in London, Swire Pacific is a conglomerate whose business interests in China date back to 1861 when the company began trading with China. In 1870, the company opened its first Hong Kong office and two years later it established The China Navigation Company (CNCo). In 1965, Swire Pacific acquired Hong Kong Bottlers Federal, a US-owned Coca-Cola bottling company. In 1994, Swire Beverages was established with Coca-Cola.

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