Coca Cola CFO hedges bets against Euro losing its fizz

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On our sister site, Coca-Cola's CFO Gary Fayard says the beverage giant has shored itself up against the weakening Euro, using hedges to protect itself from the volatile currency. 

Fayard said Coke is hedged on the euro throughout 2010 and has some coverage for 2011 as well.
"It's like buying homeowner's insurance. You have your house and you buy homeowner's insurance because if it burns down you want to be protected. But like in the good old days, if the value went up you want to participate in the upside," said Fayard. "That's what we do when we hedge.
As a global brand, Coca Cola is impacted by the performance of multiple currencies and markets. Fayard said he does not expect a double-dip recession in the mature markets of Europe and the United States, where he forecasts a slow recovery and a reset of consumer spending. But he warned that Japan is "dismal economically," while some emerging markets of Latin America are in "rapid recovery”.
He added that the firm was confident enough of the economic situation to consider smaller, bolt-on acquisitions as the firm believes that shoppers will still want to buy soft drinks even if prices rise. The biggest driver of such increases would be taxes imposed for health reasons by lawmakers.

"We're an easy target as an industry, and this is one where we're all going to have to pull together and work diligently because it's a threat," said Fayard.


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