Coca Cola – Hellenic Bottling Company (HBC) acknowledge some issues/risk doing business in emerging markets in a statement to investors. Specifically Coca Cola indicated the risk in doing business in Russia is now at the same level of risk as in Nigeria.
Coca Cola – Hellenic Bottling Company is the one Coca Cola’s largest bottling companies.
The statement goes on to say the risk can negatively impact sales in the region.
Coca Cola (HBC) cites contradictory decision and policies between local municipal, regional and national government bodies and growing complex regulations which in turn are increasing the cost of business in Russia.
Coca Cola (HBC) is also dealing with legal uncertainties in both Russia and Nigeria and went as far as calling it endemic with large scale corruption hindering American companies doing business in the region even though the countries agree to U.S. anti-corruption laws.
Further complicating matters when it comes to sales are lower consumer demand trends as consumers continue to struggle and focus their spending on essential products for them and their families.
Coca Cola is not alone in its view and situation – Coca Cola’s number one competitor Pepsi (PEP, quote) earlier highlighted similar concerns after Russia’s presidential election and warned civil unrest and corruption could negatively impact the company.
Bottom Line: Coca Cola (KO, quote) has been doing business pretty much every corner of the world from developed to emerging to frontier markers and with a great management team doing business in these unpredictable regions. I continue to look at pullbacks as buying opportunities. Coca Cola has been trading in a sideways channel and break above the $39 level as a bullish event.
This article has been revised since publication to acknowledge clarification between Coca Cola and Coca Cola HBC a bottling company distributing products.