As the world is becoming the global village, many different international companies such as

Apple, Coco-cola, Vodafone, TCS, Allianz, Shell energy and many more making their
headquarters globally (Fischer, 2003). But this report will discuss the Coco cola Amatil operating
in Australia. Moreover, it will also discuss the regulatory framework which is affecting the
company to operate it in Australia. And finally, it will also tell the companies any major
agreements that have affected the product in Australia.

Coco cola Amatil is one of the largest distributors of non- alcoholic beverages in Asia Pacific
region. It operates in Australia, Indonesia, Fiji, New Zealand, Papua New Guinea and Samoa
with around 15000 employees working in it. The Coco cola company started its soft drinks in
1964 when it purchased the coco cola bottlers in Perth (Coco Cola Australia partner with seven,
2007). The company was listed in Australian Stock Exchange in 1972. Today the primary focus
of any company is soft drink and snacks due to which the company got renamed twice Allied
Manufacturing and Trade Industries Limited in 1973 and Amatil Limited in 1977. In 1989, the
majority of stake was purchased by the coco cola company but today its ownership is 29% (Coco
Cola Australia partner with seven, 2007).

Coco cola Amatil has its facilities all over Australia. It has its key sites in North Sydney,
Northmead (NSW), Hazelmere (WA), Richlands (QLD), Moorabin (Vic) and Thebarton (SA).
The managing director of Coco Cola Company in Australia is Barry O Connell and was
appointed in July 2014. In addition to 4 different types coco cola, Company also manufacture
Fanta, Sprite, Kriks, Powerade, Coconut water, Barista Bros in Australia. It approximately
employs around 3500 people across the Australia. Also it has around 12 production facilities and
15 warehouses (Coco Cola Australia partner with seven, 2007). Around 99 percent of non
alcohol beverages are made in Australia they give service to 115000 customers nationally.
Despite of challenging condition the Coco Cola Amatil in Australia is able to perform consistent
and with stabilized earnings. Moreover, it has also shown a great progress against the three- year
$100 million cost reduction program. The savings are again reinvested into the business to drive
growth. The areas of investment will be price, brand development, innovation and technology
(Coco Cola Australia partner with seven, 2007).

The Coco Cola Amatil is trying to produce their product with low calorie or with no calorie and
this will continue to grow as Coco Cola is trying different innovative ways to reduce the calories
with no compromise in taste (Coco Cola Australia partner with seven, 2007). Recently, the Coco
Cola has launched the water product named Mount Franklin in Australia with the new
packaging. Also they have improved pricing competitiveness and expanded the distribution by
driving the smaller packs (The Coco Cola Company SWOT Analysis, 2015). In 2016, the
company spent $1.3 billion on Australian supplied goods and service. Recently, the company
announced that it would be closing its Thebarton site in South Australia as there is no space for
expansion. But they will expand the Richlands site in Queensland (The Coco Cola Company
SWOT Analysis, 2015).

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The Coco Cola Company which is headquartered in Atlanta Georgia is an American
multinational beverage corporation. The company only produces the concentrate which is sold to
the licensed coco cola bottlers worldwide (Coco Cola Announces One Brand, 2016). After that
the bottlers produced the finished products in the cans and bottles from concentrate. They sell
their products in more than 200 countries and it has 123,200 employees around the world. The
location of global head quarters of coco cola are at Europe, North America, Latin America and
Africa (Coco Cola Announces One Brand, 2016).

Regulatory framework is the infrastructure which is needed for the implementation of the certain
principles or law. According to Ray (2011) the important forms of regulation include

1. The regulation of competition

2. The regulation of injuries caused by defective products

3. The regulation of securities

4. The regulation of labor and employment

5. The establishment of accounting standards

6. Taxation

Tax is the one of the most important framework in Australia. Many large and small companies
get affected by this framework (Ray, 2011). The Coco Cola Amatil is also affected by the
taxation framework in Australia. Recently, due to the high tax and high expensive place to do the
business Coco cola decided to shut down its South Australian plant. Also another major reason
for shutting down its plant was high prices for the electricity and the location of the plant as it is
constrained by its CBD location, site layout, dated infrastructure, and expensive logistics
(Morton, 2014). The plant was producing the glass bottles, fruit juice, dairy products, and some
alcoholic beverages. Also the existing administrative, distribution, and recycling work would be
continue in South Australia. As the Coco cola Amatil close its plant 200 people lost their job in
Adelaide and CCA will provide the financial counseling and help them to find the new job
(Morton, 2014).

Furthermore, there is also ongoing demand to bring tax on sugar in Australia (Way, 2006). A tax
on sugar will directly reduced the consumption of soft drink by 15% and will raise $500 million
for the government. Australia has the highest rates in overweight and obesity in the world, also
this number are increasing day by day heavily for which the sugar sweetened drinks are mainly
responsible. The problem of obesity is highly increasing in children. Due to this tax there will be
20 % rise in prices of Coco Cola which is predicted in 12% drop off in consumption of soft
drinks in consumers (Way, 2006). As the soft drinks are directly responsible for the obesity
government is planning to take such action for reducing the obesity which will be a very big

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blow for the multinational companies like Coco cola in Australia. Also, the money rose from the
highly taxes will invested in public health sector to reduced the problem of obesity in Australia.

Recently the government of Australia has passed the new law which is the diverted profit tax. It
is also known as Google Tax. This tax will come into effect from 1 st July 2017. It is also
expected that government will able to generate revenue of $100 million by the end of 2018
2019. The main reason to enforce this law in Australia is to solve the dispute between the
Australian tax office and multinational companies (Smith, 2014). Also, the data from ATO shows
that more than one in three big multinational companies is paying no tax in Australia. So, they
have to bring the transparency and have to report their profits, assets, and taxes for each and
every country in which they operate. This tax would act as powerful tool for Australian tax
office which will helpful to keep eye on un-operative tax payers and it will make Australia as a
one of the toughest place in the world to fight multinational tax avoidance (Smith, 2014).
Normally, the google tax has already a major impact on the multinational companies. Australia is
the only second country in world after United Kingdom which has the company tax in the nation
(Smith, 2014)

This tax is aimed for the multinational companies which have global revenue of more than $1
billion and Australian revenue of greater than $25 million. So for all the multinational companies
earning revenue as above mentioned they will have to pay a 40 per cent of corporate tax on all
the profits which is 10 per cent higher than previous one (Smith, 2014). This tax will not apply
on investment trusts, wealth fund and foreign pension funds. Moreover, it would be really
difficult for multinational companies like Coco Cola to operate in Australia as they have to pay
such high taxes (Smith, 2014). Due to this additional tax it is predicted that Coco Cola might
increases their prices in the market and also stop selling different varieties of product in
Australia.

A treaty can be defined as any formal agreement between two countries regarding international
trade and commerce, peace or alliance. Australia also has implemented some of its treaties which
are affecting people, multinational companies in day to day life. One of the treaties which are
affecting the Coco Cola Amatil in Australia is tax treaty. Australia has done this agreement with
40 countries including United States of America. The tax treaty is the formal agreement between
two countries. It is also known as double tax agreement (DTA) (Sharkey, 2016). It helps the
company to eliminate the double taxation which is caused by tax jurisdictions. Moreover, when
there is international transaction in Coco Cola it provides the security regarding tax rules. Also, it
gives the evasion of taxes on different forms of income which flows between two different
countries (Sharkey, 2016). So, due to the tax treaty the Coco Cola Amatil did not need to pay the
tax 2 times on the same income which has direct impact on the prices of Coco Cola. It is also
very difficult to do business without the tax treaty in Australia as companies will need to pay
taxes 2 times on the same income.

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Secondly, another agreement is the Food Standards Australia New Zealand Act 1991. This act
provides the mutual cooperation between governments, industry and community to maintain the
uniform food regulation in Australia and New Zealand (Hudson, 2013). Due to this act the Coco
Cola has to maintain the regular proportion of its entire ingredient which is provided by Food
Standard Australia. The people have raised certain issues regarding the content of caffeine in soft
drinks. Due to this Food Standard Code restricts the Coco Cola that how much caffeine can be
added to soft drinks. So they cannot add more than 48.75mg/375 ml caffeine in one can. Also it
is necessary to have a statement on the product that it contains caffeine which helps the people to
avoid the caffeine for themselves or for the children (Hudson, 2013). They have to maintain this
standard proportion of caffeine in their products.

Lastly, free trade agreement of Australia commonly known as AUSFTA. It is the international
treaties which help to reduce the barriers for trade and investment. This agreement gives the
facilities like access to important market, good competitive position for Australian exports and
reduced the import costs for Australian business (Petrovic & Grunberg, 2017). Due to this policy
the Coco Cola can heavily invest anywhere in Australia with high security and guarantee
protection. Under the FTA, Coco Cola is able to buy the cheap goods from another country
which help them in manufacturing their products at low price. Moreover, they can also send the
goods to different country from Australia where they are paying high prices for goods to
manufacture its product. So due to FTA Coco Cola Amatil is able trade their business freely
(Petrovic & Grunberg, 2017).

Reference List
'Coca-Cola Australia partners with seven' 2007, Food Magazine, p. 6.

Coco- Cola Announces One Brand Global marketing Approach' 2016, Western Grocer, vol.
102, p. 16.

Fischer, Stanley 2003, Globalization and its challenges, American Economic Review vol.93,
no.2, pp.1-30.

Hudson, L 2013, 'New food standard introduced', Managing Intellectual Property, vol. 230, p.
25.

Morton, A 2014, 'Coca-Cola Co hits back as PepsiCo wins Australia bottle feud', Aroq Just
Drinks.Com (Global News), p. 12.

Petrovic, J, & Grunberg, B 2017, 'Intersecting Trade, Politics and Human Rights: The
Negotiation Phase of the Australia-China Free Trade Agreement', Journal of World
Trade, vol. 51, no.1, pp. 67-104.

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Ray, A. August 2011, Multinational Enterprise, International Business Law, Sixth Edition pp.
80 111.

Sharkey, N 2016, 'Departing Australia: a complex tax situation with possible benefits and hidden
traps', Tax Specialist vol. 19, no. 5, pp. 180-185.

Smith, G 2014, 'After U.K., Australia is also eyeing a Google Tax', Fortune.Com.

'The Coca-Cola Company SWOT Analysis' 2015, Coca-Cola Company SWOT Analysis, pp. 1-
10.

Way, N 2006, 'Not all sweet on sugar levy', Brw, vol. 28, no. 10, p. 18.

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