ral of its most important markets in Eastern Europe, and a transportation strike in its own home market. Given the magnitude of the decline expected in Coca-Cola Hellenic's sales and operating profitability this year, we've reassessed both our near- and long-term projections for the Coke bottler.
With the company still generating about half of its sales and operating profits from more mature markets in Central and Western Europe, it's been difficult for Coca-Cola Hellenic to avoid the same negative trends that have impacted many of its U.S.-based peers. Carbonated soft drink consumption has been declining at about the same rate in Western Europe as it has been in the U.S., with economic weakness in some of these markets only exacerbating the situation. Commodity cost inflation has also been a major impediment, as rising costs for raw ingredients, packaging materials, and the fuel used to distribute the company's products have had an adverse effect on Coca-Cola Hellenic's operating profits. And while the company has traditionally been able to rely on solid outperformance from its Eastern European operations to make up for any weakness in its more mature markets, weakening consumer sentiment in some of these economies has also led to slower sales growth.
Absent many of these near-term head winds, the company is still not entirely in control of its own destiny. The biggest issue that Coca-Cola Hellenic and many of the other Coke and Pepsi bottlers face is that there is an unequal distribution of labor and profits between the bottlers and the concentrate providers. Coke and Pepsi not only control the pricing of concentrate and other inputs sold to the bottlers, but also the terms under which they can manufacture and distribute noncarbonated beverages in their respective territories. With the cost of concentrate, royalties, and finished goods purchased from the two major beverage producers making up nearly half of a bottler's annual cost of goods sold, it takes only a minor shift in the prices charged for these items to have a major impact on profitability. Bottlers also absorb all of the other costs associated with manufacturing, packaging, and distributing Coke and Pepsi products, so it is not that difficult to see why rising commodity costs have had such a huge impact on the operating profits.
