Coca-Cola Sees Risk In Russia

| About: The Coca-Cola (KO)

By Richard Rittorno

Coca-Cola (NYSE:KO) acknowledged some issues/risks doing business in emerging markets in a statement to investors. Specifically, Coca-Cola Hellenic Bottling Company indicated the risk in doing business in Russia is now at the same level of risk as in Nigeria. The statement goes on to say the risk can negatively impact sales in the region.

Coca-Cola Hellenic Bottling Company cites contradictory decisions and policies between local municipal, regional, and national government bodies and growing complex regulations that, in turn, are increasing the cost of doing business in Russia. Coca-Cola Hellenic Bottling Company is also dealing with legal uncertainties in both Russia and Nigeria, and went as far as calling it endemic with large-scale corruption hindering American companies doing business in the region -- even though the countries have agreed to U.S. anti-corruption laws.

Further complicating matters when it comes to sales are lower consumer demand trends, as consumers continue to struggle and focus their spending on essential products for themselves and their families. Coca-Cola is not alone in its view and situation -- its No. 1 competitor, Pepsi (NYSE:PEP), previously highlighted similar concerns after Russia's presidential election and warned that civil unrest and corruption could negatively impact the company.

Bottom Line: Coca-Cola has been doing business in pretty much every corner of the world from developed to emerging to frontier markers, with a great management team doing business in these unpredictable regions. I continue to look at pullbacks as buying opportunities. Coca-Cola has been trading in a sideways channel and I see a break above the $39 level as a bullish event.

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