April 19, 2024

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The Dorilla empire is upping the ante in the Asia-Pacific region

The Dorilla empire is upping the ante in the Asia-Pacific region

Coca-Cola's largest bottler is buying the Philippine business and positioning it as a focus for future growth alongside Indonesia, two markets with populations of more than 400 million.

“There are significant growth opportunities in the beverage space and Coca-Cola's European partners will be ideally positioned to capitalize on them thanks to their scale, flexibility and innovation,” Sol Dorella, the company's president, said on September 2. June 2016.

On that day, the new company, the result of the merger of three of Europe's largest bottlers (Coca-Cola IberianPartners, Coca-Cola Enterprises and Coca-Cola Erfrischungstgetränke), made its debut on the Spanish stock market. It recorded an increase of 1.04%, reaching 35.95 euros per share, with a capital of 17.338 million euros.

Nearly eight years later, time has proven him right. The company, which this month will close its acquisition of Philippine bottler Coca-Cola, has nearly doubled in size since then, with sales rising from 11 billion to nearly 20 billion. In addition, the number of 13 markets in which it operates will increase to 30, and the number of its 54 factories will now reach 100.

The stock has risen 81% since its stock market debut, giving the company a capitalization of around €29.4 billion, ahead of Amadeus in the battle to be the seventh most valuable on the Spanish stock market, after Inditex, Airbus, Iberdrola and Santander. BBVA and Caixa Bank.

The recipe for this development included significant organic growth in Europe, which was accompanied by operational synergies resulting from the greater scale of the Group, but also an ambitious acquisition strategy, which was supported by Coca-Cola and expanded the Group's reach. Focus from Europe to the Pacific.

Coca-Cola Europeacific Partners (CCEP), renamed after purchasing Coca-Cola Amatil in 2021 – the bottler in Indonesia, Australia, New Zealand and a slew of Pacific islands – will at the end of this month close the purchase of Coca-Cola Philippines: After In the process, it would become Coca-Cola's largest bottler not only in terms of sales volume – nearly double its second-largest sales – but also in terms of volume.

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In addition, for the first time, it will have more factories in the Asia-Pacific region (55) than in Europe (45) and will have 400 million potential consumers in the region, 100 million more than in the markets it operates in the legacy region. Continent. Indonesia and the Philippines will be the main geographic regions.

However, beyond what both countries represent in the present, their importance lies in the weight they must play in their future development.

Accelerated growth

The group's new strategy was already evident when the company announced the purchase of Coca-Cola Amatil in 2021. The group added $3,000 million to its turnover in one go and entered a region where non-alcoholic drinks represent a market of 26,000 million, which are significant figures, although modest. This compares to the approximately 12,000 million (from a potential market of 97,000 million) generated by CCEP in Europe. However, the company has put all its focus on the future.

“This is a fantastic process that changes the footprint of our business,” CCEP CEO Damien Gammill said in a meeting with investors in 2022. “We are committed to delivering faster growth at the top and bottom of our income statement in the medium term.” “We have a good mix between our lucrative European markets and large companies in Australia, New Zealand and Indonesia, which opens up a great opportunity for future growth,” he added.

Indonesia emerged as key to the whole process. Coca-ColaEuropacific entered a country with a population of 280 million and the most important economy in Southeast Asia, but also entered a very young market with a thriving middle class, which represented a turning point compared to the European trend. “Buying Amatil gives us significant growth potential, especially because of its presence in Indonesia,” CCEP President Sol Dorilla explained at the Family Business Conference held in 2021, the year the operation was closed.

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The company has grown steadily since then. Its sales increased by 26% in 2022 to 17,320 million, while its net profits increased by 54% to 1,521 million. In the first nine months of 2023 – it will present its annual results at the end of the month – its sales amounted to 13.784 million, an increase of 6%.

Now, Philippines

The acquisition of Coca-Cola Philippines will now add another $1.7 billion (about €1.55 billion) to the company's turnover and about $90 million to its pre-tax profits. However, the logic of the process again looks more to the future than to the present.

The Philippines is the second most populous country in Southeast Asia, surpassed only by Indonesia, with a population of 115 million, and once again repeats some key demographic keys for company: its population is growing by 1.5% on average annually, and its economy – Thirteenth in the world in terms of GDP – prosperous and its middle class is clearly on the rise.

Additionally, the non-alcoholic beverage category, which represents a roughly $8 billion business, is growing at a rate of 10% annually, two to three times what is happening in the markets where the company is already present.

Damian Gammell explained last August, in a conference with analysts, in which he highlighted the presence of the Coca-Cola brand in the Philippines for 111 years, that “future growth opportunities include light or sugar-free drinks, energy and alcoholic beverages.” It was the first country to which it was sold outside the American continent.

The operation, which will involve paying $1.8 billion to Coca-Cola, which has owned the Philippine bottling company so far, is different from Amatil, and the group has teamed up with a local group to implement the operation. The GPC will control 60% of the group, while Aboitiz will hold the remaining 40%. Control will therefore return to the company headed by SolDaurella, which will appoint three of its five directors and its CEO, but CCEP will work alongside a partner with market experience who will help it make a smoother landing. .

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The Spanish families who came together in 2013 to create a large Iberian bottling company (see attached information), and led the European merger, are now starting to conquer the Pacific. The sun never sets on the Sol Daurella bottling empire.

From seven families to a global bottling giant

The history of Coca-Cola Europeacific Partners goes back to the 1950s, when the beverage company began concluding agreements with several Spanish families to produce and distribute its products, although the turning point came in 2013. The year saw Cobega, Colebega and Rendelsur decide Begano, Norbega and Asturbega join together to create Coca-ColaIberian Partners. Sol Durella once explained: “The bottling business was very fragmented, there were about thirty companies in Spain, and we saw that the businesses had consolidated and we needed to unite to achieve efficiency.”

The approach to setting up a large European bottling company was different. “If previously what we were looking for was cost restructuring, the goal of this process is to increase volume,” added the director, for whom the move to the Asia-Pacific region was a natural outcome of the search for growth.

In this massive decade of mergers, one thing has been constant: the Spanish families' commitment to the company. Led by the Daurellas family and Gómez Trenor, Olive Partners not only maintained its position as CCEP's top shareholder, but increased it to 36%. “We have always been united, which gives us great weight when making the decision,” Dorella admitted.