In the era of financial instability, low interest, privatization and intense/disruptive business competition,
no business is safe from competition.
However, beverage industry is one of the very few traditional industries that have survived competition and follow a more predictable change, because it still serves customers the same way, satisfy essential needs and create satisfaction, except the need to adapt to changing customer preference, taste and perception.
Coca Cola and AB inBev, serving carbonated drink and Alcohol respectively, are two exceptional companies, not only in the beverage sector but standing out, compared with other business across different sectors, such as technology, mining, retail, etc
Their business is quite simple "buy commodity, sell brand". It does not matter, if commodity price goes up or down, they can charge premium. This nature makes both businesses quite boring but extremely resilient and stable.
However, I am quite puzzled that CCA (bottler) has struggled in the past few years, while Coca Cola still manages to maintain profitability and AB InBev continues its acquisition spree. Whether CCA is a target of take-over is another topic, I am more interested in
1. the profit-sharing mechanism between coca cola parent company and CCA
2. whether CCA has any bargaining power at all, when buying syrups from the parent company
3. whether CCA profitability is held hostage, because CCA's exclusive right to distribute coca cola in Asia Pacific is being used as a bargaining chip by Coca Cola parent and can be cancelled at the discretion of the parent.
Does anyone know more about the topic? I am quite limited in this field.
