• by Nina Lentini  @Nina_Lentini, February 14, 2007

The world's largest soft-drink bottler, battling grueling hikes in raw goods, plans to eliminate nearly 5% of its work force as the soft drinks market continues its slowdown.

Coca-Cola Enterprises is eliminating almost 5% of its work force as it continues to struggle in the ever-softening carbonated drinks market. That move alone will cost $300 million over the coming years.

In a conference call yesterday with analysts, CEO Joseph Brock reported that the company took a $2.9 billion charge on an asset write-down and had a $1.71 billion loss in the fourth quarter, its worst in 10 years.

The bottler, like many food and beverage companies, is facing soaring raw goods costs, including a 9% hike in the cost of high-fructose corn syrup and aluminum. That increase had held steady at about 2.5% over the last five years.

"It's not terrible, once they get over the cost bumps that everyone is facing," said Gerry Khermouch, executive editor of Beverage Business Insights. "But [Brock] doesn't seem to harbor much hope that carbonated soft drinks won't continue on their long-term decline."

Brock has struggled to halt soda declines in the U.S. as consumers switch to healthier drinks. The bottler raised prices in North America 3% during the quarter in response to higher costs for aluminum and sweetener. That caused volume to drop 2.5%, the worst in almost two years for that unit.

Brock praised Coca-Cola, which owns about 36% of CCE, for acquiring Fuze earlier this month, but he showed no signs of backing off CCE's own effort to find niche brands.

"In the fall he was saying that if Coke showed any inclination to purchase promising brands, CCE would back off," said Khermouch. "That may yet happen, but for now he's just applauding the Fuze deal as a positive 'first step'."

The bottler added calorie-free Coca-Cola Zero soda in Belgium and Great Britain in an effort to lift European volumes and mute declines in the U.S. European volume rose 5.5% for the fourth quarter, matching the gain in the third quarter, which had been the best performance in at least three years.