Coca-Cola focuses on lowering prices

Bloomberg

Coca-Cola Co. has reopened bottle-washing plants from Russia to Turkey as it uses more returnable glass containers to lower prices amid the global recession, Chief Executive Officer Muhtar Kent said over the weekend in Boca Raton, Florida.

The company may miss growth targets during "a quarter or two" this year as the dollar strengthens, commodity costs remain higher than last year and consumers slow drink consumption, Kent also said. Coca-Cola is stepping up the use of returnable bottles overseas to try to boost sales in poor or emerging markets where consumers face higher food prices. Reusing glass bottles is lessexpensive than making one-use plastic or aluminum packaging, helping to lower retail prices.

"It was easy for us to reintroduce returnable bottles once we saw they would again be demanded," Kent said during an informal question and answer session with analysts during the Consumer Analyst Group of New York conference.

Bottling plants in Latin America, the Philippines, Turkey and Russia were built with industrial bottle washers as Coca-Cola developed those markets, Kent said. Some of them were later mothballed as Coca-Cola moved to aluminum cans and plastic bottles. Coca-Cola never eliminated returnable bottles entirely, Kent said. They are also used in parts of China and European countries including Spain, Austria and Italy.

"It’s part of their toolbox," Thomas Russo, a partner at Gardner Russo & Gardner in Pennsylvania, said in an interview following Kent’s presentation. "Now’s a good time to do it because it delivers the product well presented, affordably." Coca-Cola stock has declined 26 percent in the past year, compared with a 28 percent drop for PepsiCo Inc., the world’s No. 2 soda maker.