March 27 (Bloomberg) -- Coca-Cola Co., the world's largest soft-drink maker, will begin selling three ready-to-drink coffee beverages next month with Illycaffe SpA through its Greek bottling unit to bolster sales.

Coca-Cola, Coca-Cola Hellenic Bottling Co. and Illycaffe formed a joint venture for the global sales of three kinds of cold coffee drinks, the companies said. The agreement, which was announced in November, calls for distribution of the beverages to start next month in 10 of the 28 countries where Athens-based Coca-Cola HBC does business, Illycaffe Chairman Andrea Illy said today in a telephone interview.

Coca-Cola and Illycaffe are seeking to expand in the $16 billion market for ready-to-drink coffee beverages, which has developed primarily in Asia, Illy said. While Coca-Cola is moving to counter sagging soft-drink sales in the U.S., Illycaffe is boosting sales by introducing professional espresso machines for restaurants and cafes and adding stores to its Espressamente Illy chain of licensed coffee shops.

``This is a global agreement that allows us to introduce a premium ready-to-drink coffee product through Coca-Cola's distribution network,'' Illy said. He estimated the venture will generate about 200 million euros ($316 million) in sales in the next five to seven years.

``This is an opportunity to build a new category,'' said Vinay Kapoor, chief executive officer of the joint venture, which is called Ilko Coffee International and will be based in Milan. ``We can exceed our targets if we build this business properly.''

Shares Rise

Coca-Cola rose 33 cents to $61.48 at 12:06 p.m. in New York. Coca-Cola HBC, the world's second-largest bottler of Coca- Cola beverages, gained 24 cents to 28.26 euros in Athens, giving the company a market value of 10.3 billion euros. Atlanta-based Coca-Cola owns 24 percent of the bottler.

The coffee-based drinks include an espresso, a cappuccino and a latte, Illy said. Distribution will start in Italy and other European countries in the second quarter, and expand to at least 15 European nations by year-end. Kapoor said the drinks will be priced in line with premium sports drinks. He declined to indicate specific prices.

`Growth Opportunity'

``The European market represents a significant growth opportunity,'' Illy said, adding that ready-made coffee drinks aren't widely sold in the region. ``In Asia, where existing products are more mainstream, we will be working in the high- end, premium-quality segment.''

Coca-Cola is adding non-carbonated beverages as consumers move to sports drinks and bottled water. Soda volume dropped 2.3 percent last year in the U.S., the third-straight decline, according to Beverage Digest.

The Atlanta-based company in June purchased Energy Brands Inc. to add Glaceau Vitaminwater, and in August bought a stake in Brain-Twist Inc., which developed Cinnabon canned coffee.

Trieste, Italy-based Illycaffe is competing with Italy's biggest and third-largest coffee makers, Lavazza SpA and Segafredo SpA.

To contact the reporter on this story: Sara Gay Forden in Milan at sforden@bloomberg.net.

Last Updated: March 27, 2008 12:14 EDT