Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning.

Coca-Cola Europacific Partners disclosed 36 risk factors in its most recent earnings report. Coca-Cola Europacific Partners reported the most risks in the “Legal & Regulatory” category.

Risk Overview Q4, 2021

Risk Distribution

28% Legal & Regulatory

22% Macro & Political

14% Finance & Corporate

14% Production

11% Tech & Innovation

11% Ability to Sell

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.

Risk Change Over Time

2020

S&P500 Average

Sector Average

Risks removed

Risks added

Risks changed

Coca-Cola Europacific Partners Risk Factors

New Risk (0)

Risk Changed (0)

Risk Removed (0)

No changes from previous report

The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.

The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.

Risk Highlights Q4, 2021

Main Risk Category

Legal & Regulatory

With 10 Risks

Legal & Regulatory

With 10 Risks

Number of Disclosed Risks

From last report

S&P 500 Average: 31

From last report

S&P 500 Average: 31

Recent Changes

3Risks added

2Risks removed

1Risks changed

Since Dec 2021

3Risks added

2Risks removed

1Risks changed

Since Dec 2021

Number of Risk Changed

-2

From last report

S&P 500 Average: 3

-2

From last report

S&P 500 Average: 3

See the risk highlights of Coca-Cola Europacific Partners in the last period.

Risk Word Cloud

The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.

Risk Factors Full Breakdown - Total Risks 36

Legal & Regulatory

Total Risks: 10/36 (28%)Above Sector Average

Regulation3 | 8.3%

Regulation - Risk 1

Legislative or regulatory changes (including changes to tax laws) that affect our products, distribution, or packaging could reduce demand for our products or increase our costs.

CCEP’s business model depends on making our products and packages available in multiple channels and locations. Laws that restrict our ability to do this could negatively impact our financial results. These include laws affecting the promotion and distribution of our products, laws that require deposit return schemes (DRS) to be introduced for certain types of packages, or laws that limit our ability to design new packages or market certain packages. The packaging and climate change and water risk factors discuss global issues such as climate change, resource scarcity, marine litter and water scarcity further. In addition, taxes or other charges imposed on the sale of our products could increase costs or cause consumers to purchase fewer of them. Many countries in Europe, including countries in which CCEP operates, are looking to implement or increase such taxes. These may relate, for example, to the use of non-recycled plastic in beverage packaging, or the use of sugar or other sweeteners in our beverages (see also the risk factors regarding packaging and perceived health impact of our beverages and ingredients, and changing consumer buying trends). On a European level the regulation adopted in December 2020 laying down the EU’s multi annual financial framework for 2021-2027 includes an “own resource”, applicable as from 1 January 2021, which consists of the application of a uniform call rate to the weight of plastic packaging waste generated in each member state that is not recycled. The uniform call rate will be €0.80 per kilogram. Every EU member state decides how to collect the money needed to fulfil its contribution. However, we expect some member states to install some sort of recoupment mechanism (a tax) at national level to retrieve the outlays made to the EU. Spain has already proposed a unique plastic tax to be implemented in 2021, and GB is expected to introduce a plastic tax independent of the European levy by April 2022. EU member states are in the process of adopting implementing regulations to comply with the obligations of the Single Use Plastics Directive. The obligations include a 90% collection target for plastic bottles by 2029, a requirement that plastic bottles contain at least 30% recycled content by 2030 and a requirement for plastic beverage bottles to include tethered closures by 2024. The deadline for transposing the Single Use Plastics Directive into national law was 3 July 2021. Some member states go further than the minimum requirements of the Directive and have adopted stricter regulations. For example, circular economy legislation has been introduced in France, which requires a 50% reduction in the number of single use plastic bottles by 2030 and the phasing out of single use plastic packaging entirely by 2040. In addition to legislative initiatives at EU level, several countries in which we operate also have or are planning other legislative or regulatory measures to reduce the use of single use plastics, including plastic beverage bottles, and/or to increase plastic collection and recycling. Such measures may include implementing a DRS under which a deposit fee is added to the consumer price, which is refunded to them if and when the bottle is returned. Other measures may include rules on recycled content, individual collection or recycling targets, or a ”plastic tax”. In GB, as part of our producer responsibility obligations, we are required to purchase Packaging Recovery Notes (PRN) to show that we meet our responsibilities for recycling and recovery of packaging waste. While we have processes in place to manage our PRN exposure, we are subject to price volatility in PRN, which could increase costs for our business in the future. DRS for plastic beverage bottles currently exist in some of the countries in which we do business, such as in Norway (which is part of the European Economic Area (EEA) but is not an EU member state), the Netherlands (which has recently extended its DRS to cover all PET bottles from July 2021), Germany and Sweden. Other countries have recently adopted regulations for DRS for beverage packaging (such as Scotland where DRS will start in July 2022 that includes PET plastic, cans and glass) or have adopted legislation paving the way for DRS (such as Portugal, England and Wales, and recently Belgium). In addition to the regulations on packaging, plastic and waste in general, concern over climate change has led to more environmental legislative and regulatory initiatives at an EU and national level. These include areas such as greenhouse gas (GHG) emissions, water use and energy efficiency. At the EU level, as part of the EU Green Deal, the proposed European Climate law provides for a significant increase in the EU GHG emissions reduction target for 2030, in line with the EU’s goal of becoming carbon neutral by 2050. Also, at a national level, we have seen a number of countries in which we operate introduce, or start the process of introducing, legislation and regulation.

Regulation - Risk 2

CCEP may be exposed to risks in relation to compliance with anti-corruption laws and other key regulations and economic sanctions programmes.

CCEP and its subsidiaries are required to comply with the laws and regulations of the various countries in which they conduct business, as well as certain laws of other countries, including the US. In particular, our operations are subject to anti-corruption laws such as the US Foreign Corrupt Practices Act of 1977 (the FCPA), the UK Bribery Act 2010 (UKBA), the Spanish and Portuguese Criminal Codes and Sapin II and other key regulations such as the corporate criminal offence provisions of the UK Criminal Finances Act 2017 and the General Data Protection Regulation (GDPR). We are also subject to economic sanction programmes, including those administered by the United Nations, the EU and the Office of Foreign Assets Control of the US Department of the Treasury (OFAC), and regulations set forth under the US Comprehensive Iran Accountability Divestment Act. A GDPR violation could lead to fines of up to 4% of our global annual turnover, as well as negatively affect our reputation. Since the recent European Court of Justice Schrems II ruling, EU personal data transfers to third countries are subject to new compliance requirements, including risk assessments of foreign government surveillance, execution of standard contractual clauses with third parties and potential supplemental measures. Non-compliance with such transfer requirements would result in a GDPR violation. The FCPA prohibits providing anything of value to foreign officials for the purposes of obtaining or retaining business or securing any improper business advantage (active bribery). In our business dealings we may deal with both governments and state owned business enterprises, the employees of which are considered foreign officials for the purposes of the FCPA. The provisions of the UKBA extend beyond bribery of foreign public officials, covering both public and private sector bribery. They are more onerous than the FCPA in a number of respects, including jurisdiction, non-exemption of facilitation payments, the receipt of bribery (passive bribery), penalties and in some cases imprisonment. We do not currently operate in jurisdictions that are subject to territorial sanction imposed by OFAC or other relevant sanction authorities. However, such economic sanction programmes will restrict our ability to engage or confirm business dealings with certain sanctioned countries and with sanctioned parties. Violations of the above, including anti-corruption, GDPR, economic sanctions, competition law or other applicable laws and regulations are punishable by civil and sometimes criminal penalties for individuals and companies. Currently competition regulators are active in this sector. These penalties can vary from fines, denial of export privileges, injunctions, asset seizures, debarment from government contracts (and termination of existing contracts) to revocations or restrictions of licences, as well as criminal fines and imprisonment. Potentially any violation within one of these compliance risk areas could have a negative impact on our reputation and consequently on our ability to win future business. Having effective compliance programmes in place can never give the assurance that related policies or procedures will be followed at all times, or always detect and prevent violations of the applicable laws by our employees, consultants, agents or partners.

Regulation - Risk 3

Added

Failure to abide by our health and safety policies and guidelines could result in injuries and death of our people.

The increasing importance of flexible working and future work topics brings in the challenge of attracting, retaining and motivating existing and future employees, which exposes us to the risk of not having the right talent, required technical skillset, or expected levels of productivity. As a result, we could fail to achieve our strategic objectives and could experience a decline in employee engagement, industrial action, suffer from reputational damage or litigation.

Litigation & Legal Liabilities2 | 5.6%

Litigation & Legal Liabilities - Risk 1

Legal claims against our vendors could affect their ability to provide us with products and services, which could negatively impact our financial results.

Many of our vendors supply us with products and services that rely on certain intellectual property rights or other proprietary information, and are subject to other third party rights, laws and regulations. If these vendors face legal claims brought by third parties or regulatory authorities, they could be required to pay large settlements or even cease providing us with products and services as well as exposing CCEP to risk. These outcomes could require us to change vendors or develop replacement solutions or be subject to third party claims. This could result in business inefficiencies or higher costs, which could negatively impact CCEP’s financial results.

Litigation & Legal Liabilities - Risk 2

Litigation or legal proceedings could expose us to significant liabilities and damage our reputation.

CCEP is a party to various litigation claims and legal proceedings. We evaluate these claims and proceedings to assess the likelihood of unfavourable outcomes and to estimate, if possible, the amount of potential losses. Based on these assessments and estimates, we establish reserves or disclose the relevant claims or proceedings, as appropriate. These assessments and estimates are based on the information available to management at the time and involve a significant amount of management judgement. As a result, actual outcomes or losses may differ materially from those in the current assessments and estimates. We have bottling and other business operations in markets with strong legal compliance environments. Our policies and procedures require strict compliance with all laws and regulations that apply to our business operations, including those prohibiting improper payments to government officials. Those policies are supported by leadership and are ingrained in our business through our compliance culture and training. Nonetheless, we cannot guarantee that our employees will always ensure full compliance with all applicable legal requirements. Improper conduct by our employees could damage our reputation or lead to litigation or legal proceedings that could result in civil or criminal penalties, including substantial monetary fines as well as disgorgement of profits.

Taxation & Government Incentives3 | 8.3%

Taxation & Government Incentives - Risk 1

Changed

Future changes to tax laws in the countries in which CCEP operates could adversely affect our business.

Tax is a complex and evolving area where laws and their interpretation are changing regularly leading to the risk of increased or unexpected tax costs and or additional tax reporting obligations.Tax laws could change on a prospective or retroactive basis. Any such changes could adversely affect our business and its affiliates, and there is no assurance that we would be able to maintain any particular worldwide effective corporate tax rate. The Organisation for Economic Co-operation and Development (OECD) and the Inclusive Framework have agreed to work together to create a consistent and coordinated approach to reform the international taxation rules to address the tax challenges arising from the digitilisation of the economy and to ensure that multinational enterprises (MNEs) pay a fair share of tax wherever they operate and generate profits (a two pillar solution). On 20th December 2021, the Global Anti Base Erosion Model Rules (Pillar Two) was published. These rules provide for a minimum level of taxation on the income arising in each of the jurisdictions where large MNEs operate. The OECD is expected to release detailed commentaries and an implementation framework in 2022, with intended implementation of these rules in 2023.

Taxation & Government Incentives - Risk 2

Legal changes could affect our status as a foreign corporation for US federal income tax purposes, or limit the US tax benefits we receive from engaging in certain transactions.

In general, for US federal income tax purposes, a corporation is considered a tax resident in the jurisdiction of its organisation or incorporation. Because CCEP is incorporated under the laws of England and Wales, it would generally be classified as a non-US corporation (and therefore a non-US tax resident) under these rules. However, section 7874 of the US Internal Revenue Code of 1986, as amended (IRC), provides an exception under which a non-US incorporated entity may, in certain circumstances, be treated as a US corporation for US federal income tax purposes. Under current law, CCEP expects to be treated as a non-US corporation for US federal income tax purposes. However, section 7874 of the IRC and the related US Treasury regulations are complex and there is limited guidance as to their application. In addition, changes to section 7874 of the IRC or the US Treasury Regulations could adversely affect CCEP’s status as a foreign corporation for US federal tax purposes, and any such changes could have prospective or retroactive application. If CCEP were to be treated as a US corporation for US federal income tax purposes, it could be subject to materially greater US tax liability than as a non-US corporation.

Taxation & Government Incentives - Risk 3

Additional taxes levied on CCEP could harm our financial results.

CCEP’s tax filings for various periods are or may be subject to current or future audit by tax authorities. These audits may result, or have resulted, in assessments of additional taxes, as well as interest and/or penalties, and could adversely affect our financial results. Changes in tax laws, regulations, court rulings, related interpretations, and tax accounting standards in countries in which we operate, or if we are unsuccessful in defending our tax positions, may adversely affect our financial results. Additionally, amounts we may need to repatriate for the payment of dividends, share buybacks, interest on debt, salaries and other costs may be subject to additional taxation when repatriated.

Environmental / Social2 | 5.6%

Environmental / Social - Risk 1

Global issues such as climate change, resource and water scarcity, and the legal and regulatory responses to these issues, could adversely impact our business.

Climate change – caused by GHG emissions, in part from businesses such as ours – is resulting in global average temperature increases and extreme weather conditions around the world. This has an adverse impact on our business. CCEP’s products rely heavily on water, and climate change may exacerbate water scarcity and cause a deterioration of water quality in affected regions. It could also decrease agricultural productivity in certain regions of the world, which could limit the availability or increase the cost of key raw materials that we use to produce our products. More frequent extreme weather events, such as storms or floods in our territories, could disrupt our facilities and distribution network, further impacting our business. Concern over climate change has led to legislative and regulatory initiatives aimed at limiting GHG emissions. Policy makers continue to consider proposals that could impose mandatory requirements on GHG emissions reduction and reporting. Other climate laws could affect other areas of our business, such as production, distribution, packaging or the cost of raw materials. This in turn could negatively impact our business and financial results. Water is the primary ingredient in most of our products. It is also vital to our manufacturing processes and is needed to produce the agricultural ingredients that are essential to our business. Water scarcity and a deterioration in the quality of available water sources in our territories or to our supply chain, even if temporary, may result in increased production costs or capacity constraints. This could adversely affect our ability to produce and sell our beverages, and increase our costs. As part of our commitment to addressing our climate change impacts, we are investing in technologies that improve the energy efficiency of our operations and reduce GHG emissions related to our packaging, cold drink equipment (CDE) and transportation. In general, the cost of these investments is greater than investments in less energy efficient technologies, and the period of return is often longer. Although we believe these investments will provide long-term benefits, there is a risk that we may not always achieve our desired returns.

Environmental / Social - Risk 2

Waste and pollution, and the legal and regulatory responses to these issues, could adversely impact our business.

Waste and pollution, particularly plastic and packaging waste, is a global issue affecting our business. Although the vast majority of our packaging is fully recyclable, it is not always collected for recycling across our territories, and can end up as land or marine litter. Concern about this, and the environmental impacts of our packaging, has led to laws and regulations that aim to increase the collection and recycling of our packs, reduce packaging, through limiting the use of single use plastic, introduce quotas for refillable packaging, reduce waste and littering, and introduce specific packaging design requirements. For example, circular economy legislation has been introduced in France that requires a 50% reduction in the number of single use plastic bottles by 2030 and the phasing out of single use plastic packaging entirely by 2040. In Great Britain (GB) there are various regulatory proposals related to packaging, including the introduction of deposit return schemes (DRS) and a move towards extended producer responsibility. In Spain, draft legislation would require a 50% reduction in plastic beverage bottles and the introduction of refillable quotas. In Indonesia, the second largest contributor to marine plastic debris, the Government has launched a plan to double plastic waste collection by 2025, reduce marine plastic debris by 70% and reduce waste at source by 30%. If we fail to engage sufficiently with stakeholders to address concerns about packaging and recycling, or we are not able to adapt our business to new legislation and regulation, it could result in higher costs through packaging taxes, producer responsibility reform, damage to corporate reputation or investor confidence and a reduction of consumer acceptance of our products and packaging.

Macro & Political

Total Risks: 8/36 (22%)Above Sector Average

Economy & Political Environment4 | 11.1%

Economy & Political Environment - Risk 1

The deterioration in political unity within the EU could significantly impact our financial results and reduce our competitiveness in the marketplace.

There are concerns regarding the short and long-term stability of the euro and pound sterling and the euro’s ability to serve as a single currency for a number of individual countries. These concerns could lead individual countries to revert, or threaten to revert, to local currencies. In more extreme circumstances, they could exit from the EU, and the Eurozone could be dissolved entirely. Should this occur, the assets we hold in a country that reintroduces local currency could be subject to significant changes in value when expressed in euros. Furthermore, the full or partial dissolution of the euro, the exit of one or more EU member states from the EU or the full dissolution of the EU could cause significant volatility and disruption to the global economy. This could affect our ability to access capital at acceptable financing costs, the availability of supplies and materials, and demand for our products, all of which could adversely impact our financial results. If it becomes necessary for us to conduct our business in additional currencies, we would be subjected to additional earnings volatility as amounts in these currencies are translated into euros.

Economy & Political Environment - Risk 2

Political instability could negatively impact our operations and profits.

We continue to be exposed to risks associated with political instability in different parts of our territories. Although the political situation in Catalonia is a dormant risk, should the situation deteriorate this could lead to major instability. Such instability could result in prolonged political, economic and operational uncertainty for our business, our customers and consumers, with potential impacts on tourism, private consumption and regulation.

Economy & Political Environment - Risk 3

The deterioration of global and local economic conditions could adversely affect CCEP’s business performance and share price.

Geopolitical concerns are higher than last year, particularly with the war in Europe, the refugee crisis and other effects. Our performance is closely linked to the economic cycle in the countries, regions and cities where we operate. Normally, strong economic growth in these areas results in greater demand for our products, while slow economic growth or economic contraction decreases demand and drives down sales. For example, adverse economic conditions decrease individuals’ disposable income and propensity to consume, leading to the purchase of cheaper private label brands, or avoiding buying beverage products altogether. Those consumers who do continue to buy our products may shift away from higher margin products and packages. A weak economic climate could also increase the likelihood of customer delinquencies and bankruptcies, which would increase the risk of accounts being deemed uncollectable. For these reasons a slowing economy would likely adversely impact our business, operational results, financial condition and share price. Although economic growth, globally, has rebounded strongly from the severe GDP declines that we witnessed at the start of the pandemic, the war in Europe is likely to increase uncertainty and volatility. Much uncertainty remains relating to future growth, employment and inflation including labour cost. These factors could directly impact our business, operational results, financial conditions and share price. Monetary support from Central banks and significantly higher fiscal spending from governments has been instrumental in limiting the short term economic impact of COVID-19. If this support is not carefully unwound, it could result in widening regional economic disparities and potentially in sovereign debt concerns in certain territories. Whether real or perceived, this could result in the availability of capital being limited, which may restrict our liquidity. Even in the absence of a market downturn, CCEP is exposed to substantial risk from volatility in areas such as consumer spending and capital markets conditions, which may adversely affect the business and economic environment. This in turn may adversely affect our business performance and share price. Beyond the international economic situation, political risk stemming from increased polarisation is ever present, with the threat of extremist parties in certain regions. This could affect the economic situation in our territories, which could negatively impact our business and financial results. Other key external economic and political factors also have the potential to specifically impact API including economic and political instability in Papua New Guinea (PNG) and the impact on foreign currency liquidity, tariffs and protectionism, geopolitical turbulence in the form of US-China trade wars and trade tension between Australia and China. Low economic growth might be compounded in economies overly exposed to the tourism sector (e.g. Fiji, Bali and NZ to a degree) due to both the people’s ability to travel depending on COVID-19 border restrictions and willingness to travel once borders are re-opened. API has an exposure to PNG liquidity risks and the associated impact on short-term profitability. Access to foreign exchange in PNG is limited/restricted due to supply/demand imbalance of hard currency. The PNG Kina (PGK) is considered to be overvalued. If the PNG Government requires assistance from the International Monetary Fund to fund their budget deficit, they could require the Papua New Guinean Kina to be devalued which could significantly impact API’s financial results upon translation of Kina earnings and balance sheet into Australian dollars.

Economy & Political Environment - Risk 4

Added

Consequences of Brexit could continue to impact our profits.

The EU and the United Kingdom (UK) Trade and Cooperation Agreement (TCA) was implemented through the enactment of the European Union (Future Relationship) Act 2020 on 31 December 2020. The TCA provides the framework for the relationship between the EU and the UK and consists of a free trade agreement, a partnership for citizens’ security and a horizontal agreement on governance. Besides trade in goods and services, the TCA also covers a broad range of areas, such as investment, competition, state aid, tax transparency, air and road transport, energy and sustainability, data protection, and social security coordination. Separately, the EU and the UK agreed a nuclear cooperation agreement and an agreement on security procedures for exchanging and protecting classified information. The TCA provides that the EU and the UK may agree to additional agreements covering other areas of cooperation in the future. The near and medium-term impact of Brexit is still unclear and there is uncertainty about the future relationship between the EU and the UK. However, we continue to manage the practical changes, working with both consumers and suppliers as well as internally continuing to execute the necessary changes to our process to manage any administrative impact, including border and customs requirements.

Natural and Human Disruptions4 | 11.1%

Natural and Human Disruptions - Risk 1

Added

Adverse effects in our people’s health, wellbeing and safety could impact our business.

The COVID-19 pandemic may continue to affect the business with a higher degree of mental health issues and increased absence rates for employees. Wellbeing initiatives require new approaches to reach all employees, especially when restructuring takes place, which potentially increases us to the risk of long term absence. As a result, we could face a loss of production.

Natural and Human Disruptions - Risk 2

COVID-19 could adversely impact our business and financial results.

Global or regional health pandemics impact our business and financial results. COVID-19 is a global stress event that is impacting the entire CCEP value chain, causing disruption that requires well thought out business continuity plans and response strategies. COVID-19 can cause high levels of employee absence, and requires employees to be flexible with working from home when lockdowns are announced in our territories. In addition, there could be widespread supplier issues, including risks of access to raw materials, specialist parts and labour being impacted due to cross border restrictions on travel and movement of goods and services; the closure of entire customer sectors (e.g. leisure, restaurants, pubs and bars); and changing consumer habits. Our material risk landscape may change rapidly due to the emergence of new COVID-19 variants and the associated response from governments and societies e.g. vaccine mandates and lockdowns. Such events could have a material adverse impact on our sales volume, cost of sales, earnings, and overall financial condition.

Natural and Human Disruptions - Risk 3

Global or regional catastrophic events could negatively impact our business and financial results.

Our business may be affected by war, armed hostility and terrorism, major information technology (IT) outages and large scale natural disasters especially those occurring in our territories or other major industrialised countries. Other catastrophic events that could affect our business include the loss of senior employees, shortages of key raw materials or widespread outbreaks of infectious disease such as COVID-19. Such events could have a material adverse impact on our sales volume, cost of sales, earnings, inflation, volatility, prices and availability of commodities, energy and other inputs as well as our overall financial condition.

Natural and Human Disruptions - Risk 4

Adverse weather conditions could limit the demand for our products.

Our sales are significantly influenced by weather conditions in the countries in which we operate. In particular, due to the seasonality of our business, cold or wet weather during the summer months may have a negative impact on the demand for our products and contribute to lower sales. This could have an adverse effect on our financial results.

Finance & Corporate

Total Risks: 5/36 (14%)Below Sector Average

Share Price & Shareholder Rights1 | 2.8%

Share Price & Shareholder Rights - Risk 1

TCCC and Olive Partners, S.A. (Olive Partners) hold significant shareholdings in CCEP and their views may differ from those of our public shareholders.

Around 19% and 36% of CCEP’s Shares are owned by European Refreshments (ER, a wholly owned subsidiary of TCCC) and Olive Partners respectively. As a result of their shareholdings, TCCC and Olive Partners can influence (or, potentially, control the outcome of) matters requiring shareholder approval, subject to our Articles of Association and the Shareholders’ Agreement. The views of TCCC and Olive Partners may not always align with each other or our other shareholders.

Debt & Financing3 | 8.3%

Debt & Financing - Risk 1

Changes in interest rates or our debt rating could harm our financial results and financial position.

CCEP is subject to interest rate risk, and changes in our debt rating could have a material adverse effect on interest costs and debt financing sources. Our debt rating can be materially influenced by a range of factors, including our financial performance, acquisitions, and investment decisions, as well as the capital management activities of The Coca-Cola Company (TCCC) and changes in the debt rating of TCCC.

Debt & Financing - Risk 2

Default by or failure of one or more of our counterparty financial institutions could cause us to incur losses.

We are exposed to the risk of default by, or failure of, counterparty financial institutions with which we do business. This risk may be heightened during economic downturns and periods of uncertainty in the financial markets. If one of our counterparties became insolvent or filed for bankruptcy, our ability to recover amounts owed from or held in accounts with the counterparty may be limited. In this event we could incur losses, which could negatively impact our results and financial condition.

Debt & Financing - Risk 3

Miscalculation of CCEP’s need for infrastructure investment could impact its financial results.

To support revenue growth we are investing in our infrastructure, including CDE, fleet, technology, sales force, digital capability and production equipment. There is a risk that these investments do not generate the projected returns, either because of market or technological changes, ineffective adoption of capabilities, or because the projected requirements of these investments may differ from actual levels if product demands do not develop as anticipated. Our infrastructure investments are anticipated to be long term in nature, and it is possible that they may not generate the expected return due to future changes in the marketplace. This could adversely affect CCEP’s financial results.

Corporate Activity and Growth1 | 2.8%

Corporate Activity and Growth - Risk 1

We may not be able to execute our strategy to pursue suitable acquisitions or may have difficulty integrating acquired businesses.

Our strategy involves, in part, pursuing disciplined and attractive investments, which are intended to create a positive net present value for total shareholder return. Our efforts to execute this strategy may be affected by our ability to identify suitable acquisition targets, negotiate and close acquisition and development transactions. Further, to the extent that we are able to identify suitable investments, there are risks that integration of those investments does not proceed as anticipated or that management attention is diverted by such opportunities, and there is no guarantee that these investments will support the growth of CCEP or achieve the intended return.

Production

Total Risks: 5/36 (14%)Below Sector Average

Employment / Personnel2 | 5.6%

Employment / Personnel - Risk 1

Restructuring could cause labour and union unrest.

Restructuring can lead to labour and union unrest. Since CCEP’s inception, we have restructured in all countries and functions, resulting in a combination of redeployment and layoffs. While we continue to look for opportunities to enable CCEP to maintain and improve its position within the market, this might have a negative impact on our relationship with our employee representatives and social partners, and could cause labour and union unrest. The CCEP’s Human Rights Restructuring guidelines set out our commitment to identify, prevent and mitigate adverse human rights impacts resulting from or caused by our business activities. In the past, we have sought to minimise union unrest through constructive social dialogue e.g. on employability, which has not affected our ability to achieve our objectives. We would like to ensure that we continue this positive dialogue with the social partners. This could include more attention to resource and workforce planning, that better anticipates the capabilities and technology savviness needed in the future.

Employment / Personnel - Risk 2

Increases in the cost of wages and employee benefits, including pension retirement benefits, could impact our financial results and cash flow.

The increases in the cost of wages and employee benefits, including retirement benefits, may affect our financial results and cash flow. The increasing inflationary trend combined with high employment levels we see globally will put pressure on future wage negotiations and the anticipated salary budget. CCEP is engaged in a dialogue with social partners on this issue in which no promises are made to fully compensate the rising cost of living but to look at the whole picture over the longer term: a large employee workforce especially in front line functions, year on year salary increases awarded, year on year growth and value creation together with customers and shareholders. It is about long-term vision. However, it cannot be ruled out that for tactical reasons unions will take action here and there.

Supply Chain2 | 5.6%

Supply Chain - Risk 1

Our business success, including our financial results, depends on our relationship with TCCC and other franchisors.

Around 90% of our revenue for the year ended 31 December 2021 was derived from the distribution of beverages under agreements with TCCC. We make, sell and distribute products of TCCC through fixed term bottling agreements with TCCC, which typically include the following terms: •We purchase our entire requirement of concentrates and syrups for Coca-Cola trademark beverages (sparkling beverages bearing the trademark “Coca-Cola” or the “Coke” brand name) and allied beverages (beverages of TCCC or its subsidiaries, but not Coca-Cola trademark beverages or energy drinks) from TCCC. Prices, terms of payment, and other terms and conditions of supply are determined from time to time by TCCC at its sole discretion. •There are no limits on the prices that TCCC may charge for concentrate. TCCC maintains current effective concentrate incidence at the same levels that CCE, CCIP and CCEG had in place before the Merger, provided certain specific mutually agreed metrics are achieved. •Much of the marketing and promotional support that we receive from TCCC is at its discretion. Programmes may contain requirements, or be subject to conditions, established by TCCC that we may not be able to achieve or satisfy. The terms of most of the marketing programmes do not and will not contain an express obligation for TCCC to participate in future programmes or continue past levels of payments into the future. •Our bottling agreements with TCCC are for fixed terms, and most of them are renewable only at the discretion of TCCC at the conclusion of their terms. A decision by TCCC not to renew a fixed term bottling agreement at the end of its term could substantially and adversely affect our financial results. •We are obligated to maintain sound financial capacity to perform our duties, as required and determined by TCCC at its sole discretion. These duties include, but are not limited to, making certain investments in marketing activities to stimulate the demand for products in our territories and making infrastructure improvements to ensure our facilities and distribution network are capable of handling the demand for these beverages. Disagreements with TCCC concerning business issues may lead TCCC to act adversely to our interests with respect to these relationships.

Supply Chain - Risk 2

Our business is vulnerable to products being imported from outside our territories, which adversely affects our sales.

The territories in which we operate are susceptible to the import of products manufactured by bottlers from countries outside our territories. When these imports come from members of the EEA, we are prohibited from taking action to stop such imports.

Costs1 | 2.8%

Costs - Risk 1

Increases in costs, limitation of supplies, or lower than expected quality of raw materials could harm our financial results.

The cost of our raw materials, ingredients, packaging materials or energy could increase over time. If that happens, and if we are unable to pass the increased costs on to our customers in the form of higher prices, our financial results could be adversely affected. We use supplier pricing agreements and derivative financial instruments to manage volatility and market risk for certain commodities. Generally, these hedging instruments establish the purchase price for these commodities before the time of delivery. These pricing positions are taken in line with the Board’s agreed risk policy and the impact of these positions is known and forecasted in our financial results. This may lock CCEP into prices that are ultimately greater or lower than the actual market price at the time of delivery. We continue to experience volatility in commodity prices mainly driven by war, political uncertainty, increased protectionist policies and volatility impacts of capital markets. Our suppliers could be adversely affected by a number of external events. These could include war, strikes, adverse weather conditions, speculation, abnormally high demand, governmental controls, new taxes, national emergencies, natural disasters, health crises, such as a pandemic, and insolvency. If this happens, and we are unable to find an alternative source for our materials, our cost of sales, revenues, and ability to manufacture and distribute products could be adversely affected. The quality of the materials or finished goods delivered to us could be lower than expected. If this happens, we may need to substitute those items for ones that meet our standards, or replace underperforming suppliers. This could disrupt our operations and adversely affect our business. We continue to sign long-term supply agreements with suppliers meeting our specifications and put contingency plans in place.

Tech & Innovation

Total Risks: 4/36 (11%)Above Sector Average

Innovation / R&D1 | 2.8%

Innovation / R&D - Risk 1

CCEP may not identify sufficient initiatives to realise its cost saving goals to stay competitive.

We continue to assess potential opportunities for improvements as part of the ongoing business strategy to enable us to remain competitive in the future. The strategic objective is to ensure our competitiveness in the future and encompasses three areas: technology transformation, supply chain and commercial improvements, and working efficiently with our partners and franchisors. The focus of these initiatives is to offset potential future increases in costs, such as materials or headcount, and to allow investment in potential growth areas. The initiatives are complex due to their multi functional and multi country nature, which cover many parts of our business. Ineffective coordination and control over single initiatives and interdependent initiatives could result in us failing to realise the expected benefits. Continual change might trigger change fatigue among our people or social unrest in the event that such changes result in industrial action.

Cyber Security1 | 2.8%

Cyber Security - Risk 1

Cyber attacks, or a deficiency in CCEP’s cyber security or a customer’s or supplier’s cyber security, could negatively impact our business.

As our reliance on IT increases, so will the risks posed to our internal and third party systems from cyber incidents. A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity, or availability of our data or information systems. It could involve gaining unauthorised access to systems, either unintentionally or through an intentional attack (such as a war activities, state sponsored cyber terrorism, criminal attack, hacking or a computer virus), to disrupt operations, corrupt data, steal confidential information, achieve financial gain or threaten our Company or employees. Our business processes require high levels of integration between our IT systems and the systems of third parties (suppliers, customers, business partners). A cyber incident at any of those third parties can either spread to CCEP’s systems or indirectly have a negative impact on CCEP’s ability to operate. Companies that CCEP invests in, or that CCEP acquires, add to the risk exposure for cyber and social engineering attacks of our Company. Any cyber incident at those organisations can have a negative impact (operationally, financially, reputationally) on CCEP. A cyber incident could disrupt our operations, compromise or corrupt data, or damage our brand image. Like many companies, hackers target us, our customers and suppliers with social engineering attacks. While we have procedures and training in place to protect us against these types of attacks, they can be successful, which could also disrupt our operations, compromise or corrupt data, or damage our brand reputation. All of these outcomes could negatively impact our financial results.

Technology2 | 5.6%

Technology - Risk 1

New recycling technologies may not work or may not be developed quickly enough.

We are exploring innovative ways to achieve the packaging targets that we have set ourselves and those imposed by legislation and regulation, for example by using plastic that has been recycled via enhanced/chemical recycling technologies. There is a risk that these new technologies may not be developed quickly enough or may not work as well as intended, which could limit our ability to mitigate the impact of restrictions on single use plastics. Also, these technologies may be more expensive than current solutions, potentially reducing our profitability.

Technology - Risk 2

Technology failures could disrupt our operations and negatively impact our business.

CCEP relies extensively on IT systems to process, transmit, store and protect electronic information. For example, our production and distribution facilities and inventory management all use IT to maximise efficiencies and minimise costs. Communication between our employees, customers, and suppliers also depends, to a large extent, on IT. Our IT and operational technology (OT) systems may be vulnerable to interruptions due to events that may be beyond our control. These include, but are not limited to, natural disasters, telecommunications failures, power outages, hardware failures, human error and security issues e.g. cyber attacks. We have IT security controls, processes and disaster recovery plans in place, but they may not be adequate or implemented effectively enough to ensure that our operations are not disrupted. Cyber attacks in one country might impact our ability to do business in other countries due to the dependencies on information systems and applications. Cyber attacks against CCEP’s suppliers or system providers might disrupt our business. We continually invest in IT to ensure our technology solutions are current and up to date. If we miscalculate the level of investment needed, our software, hardware and maintenance practices could become out of date, and this could result in disruptions to our business. In addition, when we implement new systems or system upgrades (such as SAP and its modules), there is a risk that our business may be temporarily disrupted during the implementation period. Centralisation of IT systems might increase the impact of a failure of information technology or applications. When investments in or acquisitions of companies are undertaken, such as the Acquisition of CCL, the integration of IT systems and applications for those entities will increase the complexity and, therefore, the risk level of our IT infrastructure.

Ability to Sell

Total Risks: 4/36 (11%)Below Sector Average

Demand2 | 5.6%

Demand - Risk 1

Changes in our relationships with large customers may adversely impact our financial results.

A significant amount of our volume is sold through large retail chains, including supermarkets and wholesalers. Many of these customers are becoming more consolidated, or forming buying groups, which increases their purchasing power. They may, at times, seek to use this to improve their profitability through lower prices, increased emphasis on generic and other private label brands, or increased promotional programmes and payment of rebates. Competition from hard discount retailers and online retailers continues to challenge traditional retail outlets. This can increase the pressure on all customer margins, which may then be reflected in pressure on suppliers such as CCEP. In addition, from time to time a customer or customers choose(s) to temporarily stop selling some of our products as a result of disputes we may have with them. These factors, as well as others, can have a negative impact on the availability of CCEP’s products, and our profitability.

Demand - Risk 2

Health concerns could reduce consumer demand for some of our products, impacting our financial performance.

There is concern that the public health consequences of obesity, particularly among young people is increasing. Health advocates and dietary guidelines suggest that consumption of sugar sweetened beverages is a cause of increased obesity rates, and are encouraging consumers to reduce or eliminate consumption of such products. In addition, governments have introduced stronger regulations around the marketing, labelling, packaging, or sale of sugar sweetened beverages. These concerns and regulations could reduce demand for, or increase the cost of, our sugar sweetened beverages. Consumer trends have also led to an increased demand for low calorie soft drinks, water, enhanced water, isotonics, energy drinks, teas, coffees and beverages with natural ingredients. If we fail to meet this demand by not providing a broad enough range of products, this could adversely affect our business and financial results.

Sales & Marketing1 | 2.8%

Sales & Marketing - Risk 1

We may not be able to respond successfully to changes in the marketplace.

CCEP operates in the highly competitive beverage industry and faces strong competition from other general and speciality beverage companies. Our response to continued and increased competitor and customer consolidations and marketplace competition may result in lower than expected net pricing of our products. In addition, external factors such as the widespread outbreak of infectious disease (e.g. COVID-19) may adversely affect the market.

Brand / Reputation1 | 2.8%

Brand / Reputation - Risk 1

Our business could be adversely affected if CCEP, TCCC or other franchisors and manufacturers of the products we distribute are unable to maintain a positive brand image as a result of product quality issues.

Our success depends on our products, and those of TCCC and other franchisors, having a positive brand image among customers and consumers. Product quality issues, whether real or perceived, or allegations of product contamination, even if false or unfounded, could tarnish the image of our products and result in customers and consumers choosing other products. Product liability claims or product recalls could also negatively impact our brand image and business results. We could be liable if the consumption of our products causes injury or illness. We could also be required to recall products if they become unsafe to consume through contamination, damage or because of labelling errors such as the failure to declare an allergen. Adverse publicity around health and wellness concerns, water usage, customer disputes, labour relations, product ingredients, packaging recovery, and the environmental impact of products could negatively affect our overall reputation and our products’ acceptance by our customers and consumers. This could happen even when the publicity results from actions occurring outside our territory or control. Similarly, if product quality issues arise from products not manufactured by us but imported into one of our territories, our reputation and consumer goodwill could be damaged. Opinions about our business, including opinions about the health and safety of our products, can spread quickly through social media. If we fail to respond to any negative opinions effectively and in a timely manner, this could harm the perception of our brands and damage our reputation, regardless of the validity of the statements, and negatively impact our financial results.

See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.

FAQ

What are “Risk Factors”?

Risk factors are any situations or occurrences that could make investing in a company risky.

The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.

They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.

It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.

How do companies disclose their risk factors?

Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.

Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.

Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.

According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.

How can I use TipRanks risk factors in my stock research?

Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.

You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.

Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.

A simplified analysis of risk factors is unique to TipRanks.

What are all the risk factor categories?

TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.

1. Financial & Corporate

Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.

2. Legal & Regulatory

Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
Regulation – risks related to compliance, GDPR, and new legislation.
Environmental / Social – risks related to environmental regulation and to data privacy.
Taxation & Government Incentives – risks related to taxation and changes in government incentives.

3. Production

Costs – risks related to costs of production including commodity prices, future contracts, inventory.
Supply Chain – risks related to the company’s suppliers.
Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.

4. Technology & Innovation

Innovation / R&D – risks related to innovation and new product development.
Technology – risks related to the company’s reliance on technology.
Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.

5. Ability to Sell

Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
Competition – risks related to the company’s competition including substitutes.
Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
Brand & Reputation – risks related to the company’s brand and reputation.

6. Macro & Political

Economy & Political Environment – risks related to changes in economic and political conditions.
Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
International Operations – risks related to the global nature of the company.
Capital Markets – risks related to exchange rates and trade, cryptocurrency.

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