Coca-Cola to Double Spending in Indonesia

Jakarta Globe, Camelia Pasandaran & Bloomberg | November 24, 2010     

Jakarta. Coca-Cola Amatil, Australia’s biggest soft-drink maker, announced on Wednesday that it planned to double annual spending in Indonesia to 100 million Australian dollars ($97 million) through 2013 to tap rising incomes with new products.

In this file photo, models put on clothing made from  recycled
Coca-Cola cans. Coca-Cola Amatil, Australia’s biggest soft-drink
 maker, announced on Wednesday that it planned to double annual
 spending in Indonesia. (Antara Photo/Fanny Octavianus)  

“Tomorrow we’ll be announcing that we’ll be increasing our investment in Indonesia by $100 million per year for at least the next three years,” chief executive Terry Davis said after a meeting with President Susilo Bambang Yudhoyono.

He said that political and economic reform in Indonesia had sent a positive signal to Australian investors.

“It [reform] is very important for a company like Coca-Cola Amatil. Obviously we need good access to power and we need good infrastructure — that was one of the reasons for the meeting.”

The company’s investment will cover all area of the business, Davis said, including extra bottling lines and expanded warehouse facilities and distribution.

“We have nearly 10,000 Indonesian employees so we’re hoping that we can continue to provide strong employment,” he said.

The bottler also confirmed its forecast for pre-tax earnings to rise by 7 percent to 8 percent in the six months ending on Dec. 31.

Davis said that rising per-capita consumption and a growing middle class will drive growth in a market that is the company’s biggest by population, yet its smallest by contribution to profit.

While Indonesia accounts for a quarter of the company’s sales volume, it represents just 15 percent of revenue and 10 percent of earnings, Ian Abbott, an analyst at Goldman Sachs & Partners Australia, said in a Nov. 18 report.

Atlanta-based Coca-Cola Co., the world’s largest soft-drink maker, owns 30 percent of the Australian company.