Coca-Cola outlines coffee diversification plan

By Neil Merrett

- Last updated on GMT

Related tags Coca-cola Coca-cola company

Coca-Cola has today finalised details of its ready-to-drink (RTD)
coffee joint venture with Italy-based Illycaffè in a bid to further
diversify its non-carbonated portfolio of brands.

The company says it will work in cooperation with Coca-Cola Hellenic (CCH) bottling company, a leading manufacturer of the group's products, in a three-way agreement to initially produce and distribute three coffee-based drinks.

Like a growing number of soft drinks manufacturers, increasing commodity costs and consumer health concerns amongst consumers have led Coca-Cola to diversify into more value-added and nutritious products.

When it is launched next month, the venture, known as Ilko Coffee International, will serve 10 European Coca-Cola Hellenic markets including Austria, Croatia, Greece, the company said.

Coca-Cola claims that the current market for RTD coffee - excluding Japan - has grown by 10.1 per cent over the last five years to $16bn, a pattern expected to continue in the future.

The initial product launch will include two milk-based espresso bottled beverages as well as the canned Caffè product, a RTD black coffee.

Muhtar Kent, President of the Coca-Cola Company, said that the joint venture was expected to be expanded through its bottling network across Europe, Asia, North America and the Pacific region throughout the remainder of this year and into 2009.

"I look forward to this partnership delivering these great brands across the globe and enhancing our global leadership in the fast growing RTD coffee category," he said.

Coca-Cola's decision to expand into ready-to drink coffee production comes at a crucial time for the company and its international bottlers, which are having to keep up with changing consumer demand in recent years.

Last year, Coca-Cola said that while sparkling beverage volume sales increased by a solid 4 per cent, still beverage output was up by 12 per cent over the whole year.

However, the group is not the only soft drink manufacturer looking into the segment.

PepsiCo is working together with international coffee retailer Starbucks to push bottled versions of its ready-to-drink Frappucino brand in markets like China and the US.

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