Blue chip: It's worth taking a long, cool look at the real thing

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The Independent Online
FOR those of you who think things goes better with a Coke, you will have a chance to make that a part of your investment philosophy when Coca-Cola Beverages (CCB) lists its shares in London next month.

It is only a small part of the mighty Coke empire, but the prospects are tied directly to the global success of the product.

CCB is the bottling operation for Italy, Austria and Switzerland and eastern Europe, and the shares are being offered to institutional investors only, at 125p to 160p. Share dealings begin on 13 July, when small investors will have their chance to buy the shares in the market.

CCB's bottled Coke is sold in the EU and central and eastern Europe, and the prospects look mouth-watering. Sales of Coca-Cola in these countries are less than half what is drunk in the EU. For example, people in Ukraine drink less than 25 cans of Coke a year, against an average of 139 for guzzlers in the EU.

Yet any visitor to these countries will know that Coke is increasing its market share daily, and it is rare where you cannot find the ubiquitous can for sale. The figures also show where the business is taking off. Sales volumes in Ukraine, for example, were 8 million cases in 1995, but 30 million in 1996, and 37 million in 1997, with sales rising from pounds 12.7m to pounds 73.2m over the same period.

For the first five months of the year, sales in eastern Europe were up 3 per cent, dragged back by the rise of sterling. Overall, sales of the group in 1997 were pounds 1.2bn, with cash operating profits of pounds 117.9m. After the offer, the business will have 1.67 billion shares in issue, which will value it at pounds 1.3bn to pounds 1.7 bn.

No dividend is being offered for the next three years and, of course, the taste for Coke is unlikely to reach the level it has in the consumerist West. But the shares will probably represent a decent long-term investment.