Coca-Cola Co (NYSE:KO) 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 drinks (CSDs). 
Why does it matter?
- Coca-Cola Earnings Review: Carbonates Drag Down Results Yet Again
- Coca-Cola Earnings Preview: Macroeconomic Headwinds And Structural Changes To Impact Results
- Why Do Sodas Form 73% Of The Net Volume For Coca-Cola But Just Over 60% Its Value?
- How The Stronger Dollar Eroded Coca-Cola’s 2015 Results
- Where Will Coca-Cola’s Revenue And Gross Profit Growth Come From Over The Next Three Years?
- Contribution Of U.S. Soda Sales In Coca-Cola’s Overall Revenue Could Decline To Less Than 15% By 2020
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 (NYSE:PEP). 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.Notes: