The Beverages Division has the right to manufacture, market
and distribute the products of The Coca-Cola Company in seven provinces
in Mainland China, Hong Kong, Taiwan and in an extensive area in the western
USA. We work in close partnership with The Coca-Cola Company on brand
development and marketing.
Although overall sales volume grew by 9% to 322 million unit cases during
2000, the contribution to Swire Pacific attributable profit, at HK$185
million in 2000, was similar to the prior year. Mainland China again saw
strong growth with volumes rising by 12% over 1999.
Swire Beverages will continue to leverage its asset base and its considerable
distribution capability throughout its operations in order to improve
returns. This has been reflected in an increase in turnover per net assets
employed from HK$1.13 in 1999 to HK$1.22 in 2000.
Commodity price fluctuations continue to have a substantial direct impact
on the cost of core material inputs to the production process.
Swire Coca-Cola Hong Kong
Swire Coca-Cola Hong Kong continues to maintain
a leading position in the carbonated soft drink (CSD) category, holding
over 80% market share. The company is looking to enhance its position
in the faster growing non-carbonated beverage (NCB) sector.
Parallel imports and an increasing level of "house" brands have
maintained pressure on margins and volumes. Effective cost-control measures
and improved asset utilisation helped offset this.
The company will continue to focus on controlling package mix within the
different channels to maximise available margin and to seek ways to enhance
the efficiency of product distribution.
Volume grew 3% over last year driven by the bulk water and NCB sectors.
Profit attributable to Swire Pacific was HK$118 million.
Swire Coca-Cola USA
This division of Swire Pacific Holdings
Inc. is based in Salt Lake City, Utah, and serves franchise territories
in ten of the western states of the USA.
The results reflect the USA industry as a whole with good growth in NCBs
and water. Sales volume in 2000 was 9.4% higher than 1999. Although interest
charges increased significantly following the purchase of additional franchise
territories in 1999 and 2000, managed price increases have improved margins
which, together with good cost control, helped attributable profit to
rise from HK$120 million in 1999 to HK$126 million in 2000.
Consumer preference continues to migrate towards non-carbonated drinks,
especially water. CSD volumes have remained steady in spite of increased
competition from "house" brands, which now represent 12% of
total carbonated drinks.
Having successfully integrated recent franchise acquisitions, which have
added 6.6% to annualised volume, the focus is now on organic growth, with
emphasis on accelerating growth in NCB volumes. Enhanced profitability
will be sought from cost containment and margin improvements through product
and package innovation.
Swire Coca-Cola Taiwan
Swire Coca-Cola Taiwan holds the largest
share of the CSD market. This category, however, has declined slightly
in 2000. The Taiwan market, where consumer preferences are ever-changing
and spread across many brands and packages, represents a considerable
We shall continue to work closely with The Coca-Cola Company to enhance
brand presence in the NCB category as well as to revitalise the core CSD
Total volume grew 2% in 2000. The 2000 results were also significantly
affected by losses on a range of fruit juice products, amounting to HK$11
million. We have recently restructured the business to reflect revised
volume projections, and a one-off provision of HK$20 million has been
made at the company level.
|Beverages operations in Hong Kong,
Mainland China and Taiwan
('000) Total: 395,600
outlets served Total: 579,683
Swire Beverages' jointly controlled operating companies hold franchises
for Zhejiang, Jiangsu, Henan, Fujian, Guangdong, Anhui and Shaanxi provinces
and the non-exclusive sales territories of Gansu, Ningxia and, until 15th
December 2000, Jiangxi.
The extensive range of our operations in Mainland China offers considerable
opportunities for cost savings in all aspects of the supply chain. At
the same time, we intend to expand existing distribution techniques to
allow us greater control over in-store presence and pricing. This will
be backed up by continued investment in marketing to increase awareness
and market share.
Case volumes grew strongly with full-year sales up 12% over 1999. However,
the benefits of volume growth continue to be offset by pressure on prices.
Results were held back by losses sustained in Guangmei Foods Company where
increased competition between its Meijin brand and other soft drink brands
has led to falling prices. As a result, the loss attributable to Swire
Pacific from total Mainland China operations in 2000 was HK$23 million
compared to HK$16 million in 1999.