Crisis fails to reduce Coke fizz

Dubai: Business keeps on getting better for Coke. Despite the global economic recession and shaky business and consumer confidence, sales of the company's beverages are holding up and it is making healthy profits.

Ahmet Bozer, president of Coca-Cola Eurasia and Africa Group, pointed out the business has released a solid set of results for the first quarter of 2009, and he is upbeat about the rest of the year.

"The beverage business is an incredible business. All of us have to consume approximately two litres of liquids every day and [Coke] fulfills such a small portion of that around the world. As we become a total beverage company, expanding our product range into other categories, the opportunities in front of us are very big for a long time to come," he explained in an interview with Gulf News.

He is even more excited by the prospects for growth in Eurasia and Africa as the young demographics of the region, along with its increasing economic development, makes it a growing market.

"There is an emerging middle class and people who may not be spending money now are joining the consumer class. The trend may be becoming a little slower than what was happening in the past few years, but it will resume," he said.

Bozer added that the food and beverage business usually feels less of the impact of difficult economic times because people always need to eat and drink.

But, despite his optimistic outlook, Bozer insisted the Coca-Cola group is keeping a close eye on its operations and balance sheet to make sure the business is in good shape to cope with the global economic slowdown, while strengthening its position to take advantage of the recovery, which will come at some point.

Bozer also explained that despite the global slowdown, in some countries the business is "marching along without issues".

In India for example, Coca-Cola grew 28 per cent in the fourth quarter of last year and 31 per cent in the first quarter of this year.

According to the group's quarterly report from April, net profits for the first quarter of 2009 were $1.348 billion (Dh4.95 billion) - unauditted - worldwide.

Bozer pointed out that the beverage industry can serve as a leading indictor in certain countries because it deals with hundreds and thousands of small stores, and their purchase behaviour can give some hints about the psychologies at this level.

"[Coca-Cola] is doing well this year," he concluded, indicating that some businesses in the region might be in better shape than expected.

"There is a school of thought that the good old days of growth will never come back, but we have been through this before - the Russian, the Latin American, the Asian and Turkish crises - so we know how to deal with it and we are confident about our business," he said.

Besides the global economic crunch, Bozer has to keep an eye on the political instability that has flared up across the region. But, he pointed out that Coca-Cola has been very resilient even in what appears to be the most difficult of markets. "We were the first multinational in the Palestinian Authority. We have a plant there that employs thousands of people and that business is growing faster than the rest of the Middle East," he said.

Coca-Cola also has operations in Iraq and Pakistan, both of which are "thriving".

"Part of working in this territory is that you have to accept that there are challenges in your external environment," he said, "But, what gives us strength is that we have a strong local presence and partners who are well-connected in the community. We are able to operate locally in a global enterprise."

This strong relationship with the local community also applies to marketing. Coke is one of the world's top brands, in part because it prioritises developing communications that is relevant to local communities, explained Bozer.

Looking beyond the present economic crises, Bozer thinks that in the end, consumers will be more prudent, businesses will reduce waste, and there will be efforts to improve the governance of the companies.

"We will have to find a way to balance free trade and the free flow of capital with better governance of our financial institutions," he said.