APAC adjustments: Coca-Cola Europacific bets on Philippines acquisition and Indonesia realignment to boost growth

By Pearly Neo

- Last updated on GMT

CCEPbelieves that its initiatives in the Philippines Indonesia stand it in good stead to capitalise on APAC growth. ©Coca-Cola
CCEPbelieves that its initiatives in the Philippines Indonesia stand it in good stead to capitalise on APAC growth. ©Coca-Cola

Related tags Coca-cola financial results

Coca-Cola Europacific Partners (CCEP) believes that a recent Philippines acquisition and portfolio realignment in Indonesia stand it in good stead to capitalise on future growth in Asia Pacific.

CCEP is one of the largest Coca-Cola bottling companies in the world, which also has the major function in terms of producing, marketing and distributing various Coca-Cola-owned products and brands across Europe and several APAC markets.

The firm recently announced its FY2023 full-year financial results, announcing an 8% year-on-year increase in revenue to EUR18.3bn (US$19.9bn) and 11.5% year-on-year increase in profit after taxes to EUR1.7bn (US$1.84bn).

Within this, the Australia, Pacific and Indonesia (API) region saw a 5% year-on-year increase in revenue to EUR3.75bn (US$4.07bn) and 10.5% year-on-year increase in operating profits to EUR497mn (US$539.3mn), citing strong growth despite having performed a large-scale portfolio realignment in Indonesia and completed a major purchase in the Philippines.

“We have progressed our long-term transformation strategy in Indonesia and also completed the acquisition of Coca-Cola Beverages Philippines together with Abolitz Equity Ventures (AEV) – henceforth, this will have a 60:40 ownership structure with 60% to CCEP and 40% to AEV,”​ CCEP CEO Damian Gammell told the floor at the investors’ conference announcing the results.

“We are well placed for FY24 and beyond [being] stronger and better, more diverse and robust, and our categories remain resilient despite ongoing macroeconomic and geopolitical volatility.

“We continue to actively manage our pricing and promotional spend to remain relevant to our consumers, balancing affordability and premiumisation [and] have the platform and momentum, now including the Philippines, to go even further.”

CCEP acquired Coca-Cola Philippines from The Coca-Cola Company, which is the major firm that produces the well-known Coca-Cola syrup concentrate and beverage bases that are sold to the various Coca-Cola bottlers worldwide.

Gammell highlighted the acquisition as a means of strengthening CCEP’s relationship with The Coca-Cola Company, and a ‘great strategic move’ in the firm’s plans for APAC expansion.

“This provides further geographic diversification for us, doubling the size of the API region which has now been renamed as Asia, Pacific and South East Asia (APS) – the Philippines itself is also a highly attractive and growing market,”​ he said.

“The non-alcoholic ready-to-drink (NARTD) market there is valued at around EUR8bn (US$8.68bn) and expected to grow by about 10%; and it has a 115 million strong population growing at around 1.5% per annum.

“In FY2023, the Philippines brought in about EUR1.7bn (US$1.84bn) of revenue and about EUR105mn (US$114mn) worth of operating profits; and Coca-Cola already has about 45% of the local NARTD market as well as about 72% of the sparkling value share.

“All in all, this is an opportunity to also leverage local best practices and talent, and to support our transformation journey in Indonesia.”

Indonesia transformation

CCEP has also implemented a long-term transformation strategy in Indonesia to streamline its portfolio and work on new local initiatives in line with softer consumer demand.

“We have successfully executed an SKU reduction in the local portfolio of around 60%, as a part of our plans to be more choiceful on where we want to play,”​ he added.

“The focus in Indonesia will now be on Sparkling and RTD teas, including creating new drinking occasions beyond Ramadan that focus on younger consumers.

“We have also completed a new price pack channel strategy incorporating deeper understanding of Indonesian consumer sensitivities and affordability – we believe these are the right long-term decisions to optimise our cost base and transform our route to market.”

Amongst the initiatives launched in Indonesia have been the launch of Coke Zero and Sprite Zero as well as the involvement of social media influencers to attract more Gen Z consumers – and as it is there have already been some significant results seen with the distribution of all sparkling brands and packs having increased in FY2023 compared to the previous year, and sugar-free products growing at a steady rate.

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