Dive Brief:
- Coca-Cola Co. will spend $500 million to acquire a 29.4% stake in the Indonesian unit of Coca-Cola Amatil Ltd., the Australia-based Coke distributor.
- Coca-Cola Co. already owns 29% of Coca-Cola Amatil, which is the sole distributor of Coke products in Indonesia, the world's fourth-most populous nation.
- Coca-Cola Amatil plans to use the half-billion-dollar investment to build factories and warehousing and distribution facilities.
Dive Insight:
Indonesia is a gigantic - albeit a very tough - market for soft drinks. Coke used to be the giant there, but those days are no more. Coca-Cola Amatil saw profit there fall 80% in the year ended in June.
The biggest threat to Coke in Indonesia comes from rival soft drink-makers with established markets in the Asia Pacific: Peru's Aje Group and Japan's Asahi Breweries. Both of those companies seem to have done a better job in tailoring products to Indonesian tastes, i.e., lots of teas and juices and not as many carbonated soft drinks.
It seems likely that Coca-Cola Amatil will use some of this new investment to create comparable products. Might we suggest something with a touch of Asian monkfruit for sweetness?