Coca-Cola Expands In China

Zacks Investment Research
updated | Zacks.com

The Coca-Cola Co. (NYSE:KO) recently announced the opening of its 42nd bottling plant of Coca-Cola in China. The bottling plant will be located at Liaoning and will be the largest production facility of Coca-Cola in China.

Coca-Cola has invested approximately $160 million (RMB 1 billion) in the Liaoning plant, as part of the company’s $4 billion investment plan in China over the next three years, as announced earlier in August 2011, for the long-term sustainable growth in China. Currently, Coca-Cola has four production lines already operating under the new plant. Coca-Cola plans to invest in nine production lines at the new facility.

The 42-acre plant is expected to generate more than 5 billion servings of beverages, including Coca-Cola, Sprite and Minute Maid, annually. Moreover, it will provide job opportunities to 500 people as well as create 5,000 opportunities in other related industries.

Beverage companies, such as Coca-Cola and its rival PepsiCo Inc (NYSE:PEP) are showing interest in the fast-growing emerging markets of China, India and Russia, as the developed markets are nearing saturation.

Coca-Cola has already invested over $2 billion in the last 18 years in India and remains very optimistic about its Indian operations. Over the next five years, Coca-Cola, along with its bottling partners, will make a further investment of $2 billion to build consumer marketing, infrastructure and brands in India. PepsiCo also expects emerging markets like India, China, Russia and Brazil to drive its growth in future.

The new plant in Liaoning will be an important step for the long-term growth in China, where the company has been maintaining a double-digit growth in the last several years. Coca-Cola currently holds a Neutral rating on the stock with a Zacks #3 Rank (short-term Hold rating).

 
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