Have a Coke?

China Foods mulls sale of Coca-Cola bot­tling stakes

China Daily (USA) - - FRONT PAGE - By WANG ZHUOQIONG wangzhuo­qiong@ chi­nadaily.com.cn

State-owned China Foods Ltd is con­sid­er­ing a sale of its stakes in Coca-Cola bot­tling fac­to­ries, a move that would re­shape its near du­op­oly on the main­land with SwirePa­cific Ltd since the bev­er­age giant be­gan to re­fran­chise its bot­tling op­er­a­tions.

China Foods is con­sid­er­ing sell­ing stakes in 10 Coca-Cola bot­tling com­pa­nies in the coun­try through a pub­lic ten­der, it said in a Hong Kong Stock Ex­change fil­ing on Tues­day.

The com­pany will sell stakes vary­ing from 7.15 per­cent to 100 per­cent through the China Bei­jing Eq­uity Ex­change.

Half of the bot­tling fa­cil­i­ties listed for sale are joint ven­tures with Swire Pa­cific. No value was given.

China is the world’s largest con­sumer mar­ket for food and bev­er­ages prod­ucts, as an emerg­ing mid­dle class grav­i­tates to­ward for­eign brands. The sales could po­ten­tially leave Swire a big por­tion of bot­tling fa­cil­i­ties in south­ern China if the Hong Kong-based com­pany were to bid for it.

China Foods op­er­ates Co­caCola bot­tling busi­ness in 15 prov­inces, with the ma­jor­ity of them lo­cated in north­ern China, in­clud­ing Bei­jing and He­bei prov­ince, ac­cord­ing to the firm’s an­nual re­port.

Swire op­er­ates 11 plants in seven prov­inces in­clud­ing Guang­dong and Fu­jian. In the first half of the year, at­trib­ut­able profit from its China bev­er­age busi­ness was HK$119 mil­lion ($15.3 mil­lion), a 51 per­cent drop from a year ear­lier due to the coun­try’s eco­nomic slow­down.

Shares of China Foods have de­clined al­most 11 per­cent this year, while Swire Pa­cific has dropped 0.8 per­cent.

Ac­cord­ing to its half-year re­port, China Foods’ soda wa­ter and juice sales have de­clined 5 per­cent and 18 per­cent, re­spec­tively, with bot­tled wa­ter up 27 per­cent year-onyear.

Coca-Cola Co in Fe­bru­ary an­nounced plans to sig­nif­i­cantly speed up re­fran­chis­ing of its bot­tling op­er­a­tions, as it seeks to re­duce ex­po­sure to fa­cil­i­ties that are more cap­i­tal­in­ten­sive and low-mar­gin.

The world’s largest soft­drink com­pany that month signed a letter of in­tent to also re­fran­chise its China bot­tling op­er­a­tions to China Foods and Swire.

XIN­HUA

A bot­tling line of Coca Cola in Shi­ji­azhuang, cap­i­tal of He­bei prov­ince.

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