Coca-Cola Co (
) announced plans of investing USD 1.3 billion in Chile over the
next five years, fueling its foray into the South American region.
The beverage company along with regional bottler Coca Cola Andina
have already set up a USD 200 million as part of the investment
strategy. The company also plans to use a significant portion of
its investments to extend its sustainability initiatives in the
region. Other key areas the company will focus the investments on
will be purchasing equipment and marketing expenses. The new
facility will focus primarily on the production of carbonated soda
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Why does it matter?
Chile has the second highest per capita consumption of CSDs in
South America. Coca-Cola is by far the market leader in the segment
with more than 70% market share. The average Chilean consumes
427 liters of Coca-Cola per year. By deciding to focus on
further investments, Coca-Cola is expected to consolidate its
position in the Chilean market - further pushing out competitors
such as PepsiCo (
). This is also expected to have a pretty big impact on its overall
presence in South America - a region on the verge of a spike in
consumption with major events such as the FIFA World Cup and the
Olympics lined up in Brazil in the next four years.
We will analyze the impact of this development and other news
from the world of beverages in greater depth in the coming
week. Meanwhile, stay tuned for more updates on Coca
Cola's developments in the international arena.
We estimate a $39 price for Coca-Cola
, which is in-line with the current market price.
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