Coca-Cola's 20 Billion Dollar Brands & Future Growth14 - [PDF Document] (2024)

  • 7/1/2015 Coca-Cola's 20 Billion Dollar Brands & FutureGrowth

    http://www.valuewalk.com/2015/06/coca-colas-20-billion-dollar-brands-future-growth/99999/1/12

    (http://stocktwits.com/valuewalk)

    (https://twitter.com/valuewalk)(https://www.facebook.com/valuewalk)ValueWalk(http://www.valuewalk.com) (http://www.valuewalk.com)

    Posted By: Sure Dividend(http://www.valuewalk.com/author/sure-dividend/)

    Posted date: June 25, 2015 02:40:24 PM

    In: Value Investing(http://www.valuewalk.com/category/value-investing-2/)

    No Comments(http://www.valuewalk.com/2015/06/coca-colas-20-billion-dollar-brands-future-

    growth/#comments)

    Get The Full Warren Buffett Series in PDF

    Get the entire 10-part series on Warren Buffett in PDF.

    Save it to your desktop, read it on your tablet, or email

    to your colleagues.

    Email Address GET THE PDF

    Coca-Colas 20 Billion Dollar Brands &Future Growth

    Coca-Cola's 20 Billion Dollar Brands & Future Growth by SureDividend

    (http://www.suredividend.com/coca-colas-20-billion-dollar-brands-

    future-growth/)

    Coca-Cola (KO) has long been a favorite of The 8 Rules ofDividend Investing

    (http://www.suredividend.com/8rules/). Heres why.

    The company has a 3%+ dividend yield, solid 7% to 9% constantcurrency earnings-

    per-share growth expectations, and a strong competitiveadvantage.

    When investors think of Coca-Cola, they often think only of thecompanys ubiquitous

    sodas. Today, Coca-Cola is so much more than a sodabusiness.

    This article takes a look at the 20 beverage brands Coca-Colaowns that generates $1

    billion or more in sales each year. The impact of Coca-Colasbillion dollar brands, along

    with emerging brands, will be analyzed to see Coca-Colas futuregrowth potential.

    Minute Maid

    Get our free daily newsletter!

    View previouscampaigns.(http://us4.campaign-archive1.com/home/?u=c3eb7a1d092fc854772c834e0&id=299e40291b)

    Subscribe

    Email Address

    (http://www.talkmarkets.com/content/news/market-

    (http://www.resourceinvestor.com/2015/06/29/us-

    (http://www.talkmarkets.com/content/us-

    (http://www.futuresmag.com/2015/06/30/are-

    CONTENT FROM OUR PARTNERS

    Market Turmoil Due To "Grexit"And Puerto Rico Financial

    (http://www.talkmarkets.com/content/news/market-turmoil-due-to-grexit-and-puerto-rico-financial-crisis?post=67993)

    TalkMarkets

    (http://www.talkmarkets.com/content/news/market-

    turmoil-due-to-grexit-and-puerto-rico-financial-crisis?

    post=67993)

    U.S. oil glut an EIA invention?

    (http://www.resourceinvestor.com/2015/06/29/us-oil-glut-eia-invention)

    Hard Assets

    (http://www.resourceinvestor.com/2015/06/29/us-oil-

    glut-eia-invention)

    ADP Employment Report: June2015 Preview

    (http://www.talkmarkets.com/content/us-markets/adp-employment-report-june-2015-preview?post=67963)

    TalkMarkets (http://www.talkmarkets.com/content/us-

    markets/adp-employment-report-june-2015-preview?

    post=67963)

    July 2015 Economic Forecast:Partial Rebound From Last

    (http://www.talkmarkets.com/content/us-markets/july-2015-economic-forecast-partial-rebound-from-last-months-decline?post=67992)

    TalkMarkets (http://www.talkmarkets.com/content/us-

    markets/july-2015-economic-forecast-partial-rebound-

    from-last-months-decline?post=67992)

    Are Greeks rushing to Bitcoin?

    (http://www.futuresmag.com/2015/06/30/are-greeks-rushing-bitcoin)

    Futures Magazine

    (http://www.futuresmag.com/2015/06/30/are-greeks-

    ISM Manufacturing Index: June 2015Preview(http://www.talkmarkets.com/content/us-markets/ism-manufacturing-index-june-2015-

    (http://www.valuewalk.com/2015/07/hedge-funds-inflows-increased-in-may-aum-at-3-171-trillion/)Generating Employment In Poor And Fragile States(http://www.valuewalk.com/2015/07/generating-employment-in-poor-and-fragile-states/)BREAKING

    Home (http://www.valuewalk.com/) News

    About

    Books

    VALUE INVESTING (http://www.valuewalk.com/sign-email/) StockScreeners

    Value Investors

    Videos (http://www.valuewalk.com/category/videos/) Links(http://www.valuewalk.com/links/) Timeless Reading

    Register (http://www.valuewalk.com/register)

  • 7/1/2015 Coca-Cola's 20 Billion Dollar Brands & FutureGrowth

    http://www.valuewalk.com/2015/06/coca-colas-20-billion-dollar-brands-future-growth/99999/2/12

    Minute Maid(http://www.minutemaid.com/content/minutemaid/en/home/) was

    Coca-Colas first non-carbonated beverage Coca-Cola acquiredMinute Maid in 1960.

    Coca-Cola has been in the juice business for 55 years.

    Minute Maid was founded in 1945. The company got its start bywinning a

    government contract for providing powdered orange juice to theUnited States Army.

    Fortunately for the world, but unfortunately for Minute Maid,the war ended that year

    and the contract was cancelled.

    Minute Maid did not fold. The company pioneered the frozenorange juice concentrate

    approach and grew quickly. Minute Maid released its firstbottled (as opposed to

    frozen) juice in 1973 to compete with Tropicana (now owned byPepsiCo).

    Since then, the Minute Maid brand has continued to grow. By1997, Minute Maid was

    generating over $2 billion a year in sales. The last estimate ofthe companys sales was

    in 1997, but the brand has continued to grow globally since thattime. The brand now

    likely generates revenues of between $4 billion and $8 billionevery year for Coca-Cola.

    Minute Maid Pulpy

    Minute Maid Pulpy was launched in China in 2005. The companyreached billion dollar

    brand status in 2010,after just 5 years.

    Minute Maid Pulpy is the first brand Coca-Cola launchedexclusively in an emerging

    market to reach annual revenues of $1 billion or more per year.Like American

    consumers, Chinese consumers are slowly trending towardhealthier alternatives.

    The Minute Maid Pulpy brand appeals to a more health consciousconsumer. Juices

    simply do not have the same stigma as soda does. This trend willvery likely result in

    future growth for the Minute Maid Pulpy brand in China,Singapore, Thailand, and

    other Asian countries.

    Simply

    (http://www.valuewalk.com/wp-content/uploads/2015/06/Coca-Cola-1.png)

    The Simply (http://www.coca-colacompany.com/brands/simply) brandof juices is

    sold in the United States and Canada. The brand was releases in2001 and reached

    billion dollar status by 2009. Simplys best-selling juice isorange juice. The companys

    orange juice is 100% juice and not-from-concentrate.

    Despite the Simply name, the process of manufacturing Simplyorange juice is far

    from squeezing orange juice into a bottle.

    rushing-bitcoin)preview?post=67985)

    TalkMarkets (http://www.talkmarkets.com/content/us-

    markets/ism-manufacturing-index-june-2015-preview?

    post=67985)BlackBerry: Short A Has-Been?

    (http://www.talkmarkets.com/content/stocks--equities/blackberry-short-a-has-been?post=67984)

    TalkMarkets

    (http://www.talkmarkets.com/content/stocks--

    equities/blackberry-short-a-has-been?post=67984)

    (https://welcome.pubexchange.com/promo/pub/valuewalk)

  • 7/1/2015 Coca-Cola's 20 Billion Dollar Brands & FutureGrowth

    http://www.valuewalk.com/2015/06/coca-colas-20-billion-dollar-brands-future-growth/99999/3/12

    First, different types of oranges are grown, harvested, andjuiced. The orange juice is

    flash-pasteurized and the oxygen is removed from the juice toprevent spoiling. The

    juice is then categorized and separated by over 600 flavorvariables. The juice is

    recombined in a precise formula, and natural concentrated orangeflavor is added.

    Why does Coca-Cola go through this intense process? To provide astandardized

    experience for consumers. In this way, Simply orange juice willalways taste the same

    despite variances in weather which would otherwise change orangejuice tastes.

    The advanced process Coca-Cola uses gives it an advantage injuice. The company

    realized 7% volume growth in the Simply brand in fiscal 2014,far outpacing volume

    growth in total still (non-carbonated) beverages of 4% for thecompany.

    Del Valle

    Coca-Cola acquired (http://www.bloomberg.com/apps/news?

    pid=newsarchive&sid=aJGqJwkCu_Ss) Del Valle in 2007 for atotal of $470 million

    ($380 million in cash and $90 million in assumed debt). At thetime of acquisition, Del

    Valle had annual sales of around just under $500 million a year.By 2010, Coca-Cola

    grew Del Valle to reach $1 billion a year in annual sales.

    The Del Valle brand is sold in the United States and LatinAmerica. The two largest

    markets for the brand are Mexico and Brazil. Del Valle sells avariety of fruit juices.

    Coca-Cola has been able to quickly grow revenue in the Del Vallebrand by

    standardizing packaging and unifying the brand. The companysstandardized

    packaging helps consumers to quickly identify the Del Vallebrand, despite several

    different flavors of juice. In addition, Coca-Colas bottlingpartners, strong distribution,

    and expertise in advertising have all played important parts inDel Valles success since

    the 2007 acquisition.

    Powerade

    Powerade was released in 1988 to compete with PepsiCos Gatoradebrand. Since that

    time, the company has captured around 20% of the sports drinkmarket. Gatorade still

    has a commanding market share of around 70%.

    Powerade has grown through sponsorships of various sportingevents. Powerade

    currently sponsors or has sponsored the following sports events:Australian Rugby

    League, Rugby Union Teams in Australia, Ireland, and NewZealand, NASCAR, the

    PGA Tour, the NCAA, several FIFA soccer league teams, and theU.S. Olympic team

    (excluding basketball and soccer), among other sporting eventsand teams.

    The Powerade brand is currently managed by Coca-Colas GlaceauVitamin Water

    team. Powerade is a global brand sold around the world.

    Glaceau Vitamin Water

  • 7/1/2015 Coca-Cola's 20 Billion Dollar Brands & FutureGrowth

    http://www.valuewalk.com/2015/06/coca-colas-20-billion-dollar-brands-future-growth/99999/4/12

    (http://www.valuewalk.com/wp-content/uploads/2015/06/Coca-Cola-2.png)

    Glaceau(http://www.coca-colacompany.com/brands/glaceau-vitaminwater)Vitamin

    Water was acquired by Coca-Cola in 2007 for $4.1 billion

    (http://www.washingtonpost.com/wp-

    dyn/content/article/2007/05/25/AR2007052500405.html). Along withVitamin

    Water, Glaceau also sells Smart Water and Fruit Water. The dealwas Coca-Colas

    largest acquisition at the time.

    At the time of acquisition, Glaceau had annual sales of $350million. Coca-Cola

    acquired the company for a price-to-sales ratio of 11.7, morethan 10 times the price-

    to-sales ratio the company paid to acquire Del Valle in the sameyear.

    Coca-Cola quickly grew Vitamin Water into a billion dollar brandafter acquiring it.

    Still, the company paid such a loft valuation multiple for thecompany that the deal

    likely should not have been made. Coca-Cola would have been muchbetter off simply

    repurchasing its own shares than paying $4.1 billion for a brandwith $350 million in

    annual sales; not profits.

    Aquarius

    Aquarius is the leading sports drink in Japan. Coca-Cola alsosells water under the

    Aquarius brand in various countries. Coca-Cola release Aquariusin 1983.

    The brands growth model is similar to that of Powerade.Coca-Cola sponsors

    international sporting events to promote the Aquarius brand. Thebrand is most

    popular in Asia, especially Japan.

    Ayataka

    (http://www.valuewalk.com/wp-content/uploads/2015/06/Coca-Cola-3.png)

    Ayataka(http://www.coca-cola.com.sg/beverage_benefits/ayataka.asp) is acalorie

    free green tea brand sold in Japan and Singapore. The Ayatakabrand imitates the

    experience of drinking traditionally brewed Japanese greentea.

  • 7/1/2015 Coca-Cola's 20 Billion Dollar Brands & FutureGrowth

    http://www.valuewalk.com/2015/06/coca-colas-20-billion-dollar-brands-future-growth/99999/5/12

    Coca-Cola introduced Ayataka in 2007. By 2012, the brand reached$1 billion per year

    in annual sales. The Ayataka brands success comes from itsunique formulation and

    marketing.

    When consumers swirl a bottle of Ayataka, they can seecloudiness and particles inside

    the beverage. This is a similar experience to authenticallybrewed green tea in Japan.

    The Ayataka brand is an on-the-go solution for Japanese greentea drinkers.

    Coca-Cola

    The Coca-Cola brand is the most popular ready-to-drink beveragein history. Coca-

    Cola was created in Atlanta, Georgia in1886 by JohnPemberton.

    The Coca-Cola brand is sold in over 200 countries in the world.Coca-Cola is an iconic

    brand. It is instantly recognizable around the world.

    The Coca-Cola brand needs little explanation. The amazingsuccess of the Coca-Cola

    brand has resulted in Coca-Cola companys tremendous growth overthe last 100+

    years.

    Fanta

    Fanta is Coca-Colas second oldest company owned brand. Fanta wascreated in 1940.

    Due to a trade embargo, Coca-Cola could not import its productsto Nazi Germany.

    The head of Coca-Cola Germany at the time decided to create anew soda with only

    ingredients available in Germany. The result was Fanta.

    After World War II, Coca-Cola shut down Fanta and beganproducing Coca-Cola again

    in its German facilities. The company re-launched Fanta in 1955after PepsiCo

    launched several new products. Fanta is heavily marketed inEurope, Asia, Africa, and

    South America.

    The 75 anniversary of Fanta was celebrated in Germany this year.Coca-Cola once

    again had a marketing failure. The company issued a less sweetversion of Fanta that

    was similar to the original war-time formula of Fanta. Coca-Colasaid it wanted to get

    back the feeling of the Good Old Times. The early 1940s inGermany were not good

    old times, and many misinterpreted Coca-Colas message. Coca-Colaquickly replaced

    its advertisem*nt.

    Sprite

    Sprite is one of the most popular soft drinks in the world. Thelemon-lime soda was

    introduced by Coca-Cola in 1961. Sprite is now sold in over 200countries.

    Sprite was originally developed in Germany in 1959 as clearlemon Fanta. Coca-Cola

    decided to rebrand the soda and call it Sprite for the UnitedStates market. Coca-Cola

    introduced Sprite to compete with 7-Up. Sprites sales surpassed7-Ups decades ago.

    Diet co*ke

    Diet co*ke was introduced to the market in 1982. Since that time,the Diet co*ke brand

    has become one of the most successful soda brands in the world.Today, Diet co*ke is

    sold in over 185 countries.

    th

    rd

  • 7/1/2015 Coca-Cola's 20 Billion Dollar Brands & FutureGrowth

    http://www.valuewalk.com/2015/06/coca-colas-20-billion-dollar-brands-future-growth/99999/6/12

    Diet co*ke is the 3 most popular(http://www.suredividend.com/pepsi-overtakes-

    diet-co*ke-as-2-soda-in-u-s-which-is-best-investment/) soda inthe United States,

    behind only Pepsi and Coca-Cola. The market share in the UnitedStates for the top 5

    most popular sodas is shown below:

    Coca-Cola: 17.6% market share

    Pepsi: 8.8% market share

    Diet co*ke: 8.5% market share

    Mountain Dew: 6.9% market share

    Pepper: 6.8% market share

    Diet co*ke is nearly as popular as Pepsi is in the United States.Coca-Colas soda brands

    are significantly stronger than Pepsis based on marketshare.

    Coca-Cola Zero

    Coca-Cola Zero is Coca-Colas latest soda brand to reach $1billion in annual sales. The

    Coca-Cola Zero brand was launched in 2005. By 2007, it reachedbillion dollar brand

    status.

    Coca-Cola Zeros success is a result of the massive brand equityin the Coca-Cola

    brand. The Coca-Cola Zero brand is targeted specifically atmales. Diet co*ke is more

    popular with women while men tend to avoid the soda due to theword diet. Coca-

    Cola Zero is Coca-Colas answer to a low calorie soda formen.

    Georgia Coffee

    The Georgia Coffee brand includes more than 100 ready-to-drinkcoffee beverages.

    The Georgia Coffee brand was first introduced in Japan in 1975.Since that time, the

    brand has expanded to China, South Korea, Singapore, andIndia.

    The Georgia Coffee brand is especially successful in Japan.Georgia Coffee is the

    leading ready-to-drink coffee brand in Japan. The Georgia brandsells more than twice

    as much volume as the Coca-Cola brand does in Japan.

    The ready-to-drink coffee market makes up 21% of the entireready-to-drink

    beverage market in Japan

    (http://www.probat.com/fileadmin/user_upload/Files/Connecting_Markets_Coffee/01_Japanese_RTD_Coffee_Market.pdf).

    Teas account for 22% of the market, with carbonated beveragescoming in at 15% and

    bottled water at 13%. Canned/bottled coffee is much more popularin Japan than it is

    in the United States. The Georgia brands leading market share inthe Japanese ready-

    to-drink coffee market is a substantial earnings generator forCoca-Cola.

    Schweppes

    Coca-Cola owns the Schweppes brand outside of the followingcountries: The United

    States, Canada, Mexico, and most of the European Union. Dr.Pepper/Snapple (DPS)

    owns the Schweppes brands in the previously mentionedcountires.

    The process of carbonating beverages was invented in 1770 byJoseph Priestley.

    Jacob Schweppe refined and patented his own process of creatingmineral water in

    1783, creating the Schweppes brand. The Schweppes brand isCoca-Colas oldest

    owned brand much older than the Coca-Cola brand itself which wascreated in 1892.

    I LOHAS

    rd

  • 7/1/2015 Coca-Cola's 20 Billion Dollar Brands & FutureGrowth

    http://www.valuewalk.com/2015/06/coca-colas-20-billion-dollar-brands-future-growth/99999/7/12

    I LOHAS became a billion dollar brand this year. I LOHAS waslaunched in Japan in

    2009. Since that time, it has quickly become the leading mineralwater brand in Japan.

    The I LOHAS brand is marketed to be an earth friendly product.After drinking an I

    LOHAS beverage, consumers can simply twist the bottle to compactit, reducing the

    size its size for more efficient disposal. The image below

    (https://triplelights.com/uploads/2014-12/i-lohas-water-features-ea-post-274-

    600x375-20141226-1.jpg) show the twisting idea of thebottle.

    (http://www.valuewalk.com/wp-content/uploads/2015/06/Coca-Cola-4.png)

    The disposal of garbage has long been a more discussed issue inJapan than in the

    United States. Japans large population and small country sizemake garbage space

    come at a premium. The more efficient landfill space of the ILOHAS bottle is

    particularly appealing in Japan.

    Dasani

    Dasani was released by Coca-Cola in 1999. Coca-Cola createdDasani to compete with

    PepsiCos (PEP) popular Aquafina water brand. Since that time,Dasani has become

    the market leader in the highly fragmented bottled waterindustry in the United

    States with a 7.4% market share.

    Coca-Cola attempted to launch Dasani Twist in 2012. Dasani Twistuses the same

    twisting packaging that has propelled I LOHAS to success inJapan. Dasani Twist did

    not drive sales in the United States like it did in Japan.

    Dasani is most popular in the United States and Canada.Coca-Cola botched the

    products release in the United Kingdom in 2004. Coca-Colasadvertising department

    used the phrase bottled spunk to describe Dasani. Coca-Colaclearly didnt do their

    research; spunk is slang for sem*n in the United Kingdom. Ifthat werent bad

    enough, bromate a known carcinogen was found in Dasani in theUnited Kingdom.

    Coca-Cola pulled Dasani from the United Kingdom market and hasnot introduced

    Dasani to continental Europe.

    Bon Aqua

    Dasani has not been a hit internationally. Coca-Colas Bon Aquabrand is its

    international answer to bottled water.

  • 7/1/2015 Coca-Cola's 20 Billion Dollar Brands & FutureGrowth

    http://www.valuewalk.com/2015/06/coca-colas-20-billion-dollar-brands-future-growth/99999/8/12

    Bon Aqua became a billion dollar brand in 2013. The Bon Aquabrands most popular

    markets are Russia, Hong Kong, South Africa, and Germany.

    Gold Peak

    (http://www.valuewalk.com/wp-content/uploads/2015/06/Coca-Cola-5.png)

    Gold Peak tea (http://www.goldpeakbeverages.com/tea/) wasreleased in the United

    States in 2006. It reached billion dollar brand status by 2014.Gold Peak tea is made

    with real sugar, tea leaves, and water. The brand has nopreservatives.

    Gold Peak tea has realized rapid growth since its release. Theready-to-drink tea

    industry is growing quickly as consumers look for caffeinatedbeverages that are

    healthier than sodas. Coca-Cola has a long growth runway aheadin tea. The company

    currently has just a 6.8% global market share

    (http://www.statista.com/statistics/387413/market-share-of-leading-ready-to-

    drink-tea-companies-worldwide/) in the ready-to-drink teacategory.

    Fuze Tea

    Fuze Tea is Coca-Colas first global tea brand. Coca-Colareleased Fuze Tea in 14

    countries in 2012. Just 2 years later, Fuze Tea became a billiondollar brand. Going

    from 0 sales to $1,000,000,000 a year in 2 years is nothingshort of phenomenal.

    Since its release, Fuze Tea has been quickly expanded to nearly40 countries. The

    global success of Fuze Tea is a result of Coca-Colas excellentglobal distribution

    platform. Fuze Tea will likely continue growing along with theready-to-drink tea

    category.

    Emerging Brands

    Coca-Colas 20 billion dollar brands give it an unrivaledportfolio of high quality

    beverages to drive profits. The company must continuously createor acquire new

    brands to drive further growth and stay ahead of industrytrends. Coca-Colas

    Venturing & Emerging Brands division (http://www.coca-

    colacompany.com/innovation/the-next-big-thing-how-co*kes-venturing-emerging-

    brands-team-stays-a-step-ahead-of-tomorrows-thirsts) isresponsible for finding the

    next big thing. To use a baseball analogy, the Venturing &Emerging Brands division is

    Coca-Colas farm system. Once a brand graduates, it hits the bigleagues and gets to

    utilize Coca-Colas unrivaled distribution system.

    The Venturing & Emerging Brands division looks for new nicheor upcoming beverage

    brands with at least $10 million or more in sales. It invests inthese brands and works

    with them to reach at least $75 million in annual sales. Oncethat number is reached,

    the brand is eligible for moving into the corporate Coca-Colabusiness.

  • 7/1/2015 Coca-Cola's 20 Billion Dollar Brands & FutureGrowth

    http://www.valuewalk.com/2015/06/coca-colas-20-billion-dollar-brands-future-growth/99999/9/12

    The Venturing & Emerging Brands division was created inresponse to the Glaceau

    acquisition. Coca-Cola acquired Glaceau for $4.1 billion a steepprice for a business

    with less than $400 million in annual revenues. The Venturing& Emerging Brands

    division can save Coca-Cola billions by indentifying promisingbrands and acquiring

    them before they reach the size of Glaceau.

    The Fuze, NOS, and Honset Tea brands are the biggest successstories so far at the

    Venturing & Emerging Brands division. Fuze in particular hasdone exceptionally well

    and reached billion dollar brand status in 2014. Coca-Colaacquired Fuze beverages

    (http://www.wsj.com/articles/SB117034638924495048) in 2007 foraround $250

    million.

    Coca-Cola bought 40% of Honest Tea

    (http://www.reuters.com/article/2011/03/01/us-cocacola-honesttea-

    idUSTRE72055U20110301) in 2008 for $43 million. The companypurchased the

    remainder of the company in 2011. Since Coca-Cola was exercisingan option to

    purchase the entire company made in a deal in 2008, Coca-Colalikely paid under $150

    million for the entire business, but the exact details are notdisclosed. Honest Tea

    generated an estimated(http://www.washingtonpost.com/business/economy/even-

    after-sale-to-coca-cola-bethesda-based-honest-tea-work-in-

    progress/2014/06/28/83d67924-fb22-11e3-932c-0a55b81f48ce_story.html)$130

    million in sales in fiscal 2014. Coca-Cola is quickly expandingthe Honest Tea brand.

    Honest Tea now has an exclusive deal with Wendys (WEN) to selltea at the

    hamburger retailer. In addition, Coca-Cola has introduced HonestFizz

    (https://www.honesttea.com/blog/products/root-beer/) organiczero calorie sodas to

    capitalize on the Honest brand name.

    Coca-Cola Growth Potential

    In 2007 Coca-Cola had 10 billion dollar brands. Just 8 yearslater, the company has 20

    billion dollar brands. The company sells 1.9 billion beverageservings every day. Coca-

    Colas global position by ready-to-drink beverage category isshown in the image

    (http://phx.corporate-ir.net/External.File?

    item=UGFyZW50SUQ9MjkwNDg1fENoaWxkSUQ9LTF8VHlwZT0z&t=1)below.

    (http://www.valuewalk.com/wp-content/uploads/2015/06/Coca-Cola-6.png)

  • 7/1/2015 Coca-Cola's 20 Billion Dollar Brands & FutureGrowth

    http://www.valuewalk.com/2015/06/coca-colas-20-billion-dollar-brands-future-growth/99999/10/12

    Coca-Cola is the global leader in ready-to-drink beverages.Still, the company has

    tremendous room for growth. The average global householdconsumes 26 beverage

    servings a day. Only 1.4 of these servings come from Coca-Colabrands.

    The global population continues to rise, as do consumer incomes.Both population

    growth and income growth will help drive further sales forCoca-Cola. The company is

    investing in and partnering with African bottlers to gain betteraccess to the continent.

    Africa currently has a population of 1.1 billion. By 2100, thecontinent is expected to

    have a population of over 4 billion. Populations growth isexpected to be slightly

    negative in Europe, barely positive in North America, and slowin Asia. Africa will be

    the global population growth driver over the next severaldecades. Coca-Colas

    foresight into the continent will likely help drive growth.

    In the United States, there is a perception that sodas (alsocalled sparkling beverages)

    are in decline due to health concerns. The demise of the soda isfiction. Sparkling

    beverage sales are growing globally, although not as quickly asnon-carbonated (also

    called still) beverage sales. The image(http://phx.corporate-ir.net/External.File?

    item=UGFyZW50SUQ9MjkwNDg1fENoaWxkSUQ9LTF8VHlwZT0z&t=1)below

    shows this growth over the last several years.

    (http://www.valuewalk.com/wp-content/uploads/2015/06/Coca-Cola-7.png)

    Both carbonated and non-carbonated beverage sales areincreasing. Coca-Colas goal is

    to realize growth above the industry average. The company iscertainly positioned to

    do so. Coca-Colas distribution system and marketing budget giveit strong competitive

    advantages in the beverage industry. Coca-Cola can quickly growbillion dollar brands,

    as evidenced by Fuze Tea, Coca-Cola Zero, Ayataka, and MinuteMaid Pulpy. All 4 of

    these brands reached billion dollar status in 5 years or less.Fuze Tea and Coca-Cola

    Zero reached $1 billion in annual sales in just 2 years.

    In total, Coca-Cola shareholders can expect earnings-per-sharegrowth of 7% to 9% a

    year going forward. This growth combined with the companys 3.3%dividend yield

    gives investors expected total returns of between 10% and 12% ayear going forward.

    The Safety of Investing in Coca-Cola

    Total returns of 10% to 12% a year should appeal to investorslooking to compound

    their wealth over time. Coca-Cola shares have even greaterappeal due to their low-

    risk nature. Coca-Cola is a Dividend King(http://www.suredividend.com/the-

    dividend-kings-dividend-stocks-with-50-years-of-rising-dividends/);the company

    has paid increasing dividends for over 50 consecutive years.

  • 7/1/2015 Coca-Cola's 20 Billion Dollar Brands & FutureGrowth

    http://www.valuewalk.com/2015/06/coca-colas-20-billion-dollar-brands-future-growth/99999/11/12

    (http://stocktwits.com/widgets/share)

    Coca-Cola sells branded beverages. This reduces the risk ofinvesting in the company.

    It is virtually impossible to imagine a world where humans nolonger drink beverages.

    This means there will always be demand for Coca-Colas products.This is in stark

    contrast to riskier technology companies. Eastman-Kodak was amember of the nifty

    fifty at one time and believed to be a high quality businesssuitable for long-term

    investment. Unfortunately, the companys competitive advantagewas built in an

    industry that became obsolete. Eastman-Kodak filed forbankruptcy in 2012. It is very

    difficult to imagine a similar fate for Coca-Cola.

    Warren Buffett (http://www.valuewalk.com/warren-buffett/) firstinvested in Coca-

    Cola in 1988. Since around the time of Warren Buffettsinvestment, Coca-Cola has

    total returns of around 2,500%(http://www.suredividend.com/coca-cola-in-1989-

    compared-to-todays-top-10-dividend-stocks/) since that time. Notbad for a business

    that just sells beverages. Coca-Cola is still one of WarrenBuffetts largest holdings.

    Valuation

    Its far better to buy a wonderful company at a fair price than afair company at a

    wonderful price

    Warren Buffett

    Coca-Cola is currently trading for a price-to-earnings ratio of19.7 (using adjusted

    earnings). The companys price-to-earnings ratio is slightlylower than the S&P 500s

    current price-to-earnings ratio of 20.8. Coca-Cola is certainlynot a deep value stock.

    The company is an exceptionally high quality business with along growth runway

    ahead. Coca-Cola is likely trading around fair value at thistime.

    Final Thoughts

    Coca-Cola has compounded shareholder wealth for very longperiods of time. There is

    nothing standing in the way of future growth for Coca-Cola. Thecompany will very

    likely continue rewarding shareholders with rising dividends andearnings-per-share

    as a result of Coca-Colas strong brand portfolio.

    Coca-Cola has slowly transitioned from a business built on theCoca-Cola soda brand to

    a diversified global beverage powerhouse. Coca-Colas competitiveadvantage comes

    from its large advertising expenditures and its excellentdistribution system. The

    company can either acquire or create new promising brands andquickly bring them

    onto the global scale. Coca-Cola is the global leader in juice,ready-to-drink coffee, and

    carbonated beverages. Coca-Cola makes an excellent investmentfor long-term

    investors looking for rising dividend income.

    Previous

    (http://www.valuewalk.com/2015/06/china-

    u-s-spying/)

    China, US To Develop Codeof Conduct For CyberSpying(http://www.valuewalk.com/2015/06/china-u-s-spying/)

    Next

    (http://www.valuewalk.com/2015/06/samsung-

    caught-disabling-windows-

    updates/)

    Samsung Caught DisablingWindows Updates

    (http://www.valuewalk.com/2015/06/samsung-caught-disabling-windows-

    updates/)

    (http://www.valuewalk.com/2015/06/china-

    u-s-spying/)

    (http://www.valuewalk.com/2015/06/samsung-

    caught-

    disabling-

    windows-

    updates/)

  • 7/1/2015 Coca-Cola's 20 Billion Dollar Brands & FutureGrowth

    http://www.valuewalk.com/2015/06/coca-colas-20-billion-dollar-brands-future-growth/99999/12/12

    Load Comments

    Copyright 2015 ValueWalk - Privacy Policy(http://www.valuewalk.com/legal-disclaimer-valuewalk/)

    ABOUT THE AUTHOR

    (http://SureDividend.com)

    (http://www.valuewalk.com/author/sure-

    Sure Dividend (http://www.valuewalk.com/author/sure-

    dividend/)

    Sure Dividend is designed specifically to simplify the processof investing

    in high quality businesses with shareholder friendly managementsfor

    individual investors. Sure Dividend takes a quantitativeapproach to this

    task, while providing qualitative analysis backed up byfundamentals. The

    Sure Dividend approach uses The 8 Rules of Dividend Investing tosimplify

    the process of investing in high quality dividend growthstocks.

Coca-Cola's 20 Billion Dollar Brands & Future Growth14 - [PDF Document] (2024)

FAQs

What is Coca-Cola's growth strategy? ›

Functional Strategy Powering Global Growth

Rather than handle bottling and distribution entirely on its own, Coca-Cola adopted a unique franchising model early on. This involved partnering up with local bottling companies while focusing internally on brand building and product concentrate manufacturing.

What is the new product of Coca-Cola in 2024? ›

"Coca-Cola Spiced features "a unique alchemy of our iconic cola, raspberry and spiced flavors," the Coca-Cola company said in a release. Coca-Cola said despite being called "spiced," the new beverage doesn't pack any heat. Drinkers will taste a "burst of refreshing raspberry flavors and spiced notes."

How many billion dollar brands does Coca-Cola own? ›

About The Coca‑Cola Company

Led by Coca‑Cola, one of the world's most valuable and recognizable brands, our Company's portfolio features 20 billion-dollar brands including Diet co*ke, Fanta, Sprite, Coca‑Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle.

What are the future plans of Coca Cola company? ›

This means shifting our marketing investments towards digital, live and retail experiences, meeting our consumers where they are. Coca‑Cola Creations introduces new flavors, designs and unexpected experiences that blend music, fashion and technology for fans to enjoy around the world.

What is Coca-Cola's branding strategy? ›

Brand Positioning and Emotional Appeal: Coca-Cola's marketing strategy centers around brand positioning and emotional appeal. The company positions itself as a symbol of happiness, joy, and togetherness.

What makes Coca-Cola so successful? ›

In summary, Coca-Cola's strong brand recognition, diversified product portfolio, global distribution network, effective advertising, and constant innovation, have all contributed to the company's profitability.

Who is Coca-Cola's biggest customer? ›

“Those two companies helped each other grow and expand around the globe,” Mr. Starmann said. “Neither one would be what they are today without the other.” McDonald's is co*ke's largest restaurant customer, and the two companies maintain a unique, symbiotic relationship.

Who is the biggest owner of co*ke? ›

According to the latest TipRanks data, approximately 39.48% of the company's stock is held by institutional investors, 5.84% is held by insiders, and 37.85% is held by retail investors. Warren Buffett owns the most shares of Coca-Cola (KO).

What is Coca-Cola future vision? ›

Our Vision:

Our vision is to craft the brands and choice of drinks that people love, to refresh them in body & spirit. And done in ways that create a more sustainable business and better shared future that makes a difference in people's lives, communities and our planet.

What is the future prediction for Coca-Cola? ›

Stock Price Forecast

The 11 analysts with 12-month price forecasts for KO stock have an average target of 68.27, with a low estimate of 60 and a high estimate of 72. The average target predicts an increase of 9.02% from the current stock price of 62.62.

What is the Coca-Cola strategy 2025? ›

Our Mission 2025 commitments on climate, packaging, water, ingredients, nutrition, people and communities set measurable targets. We aim to achieve net zero emissions by 2040 and have a net positive impact on biodiversity in critical areas of our value chain by 2040.

What type of strategy does Coca-Cola use? ›

Cocacola uses a functional strategy to run its business. Functional strategies are specific goals set out for different divisions of an organisation to reach its functional objectives. The divisions usually include Marketing, Finance, Operations, and Human Resources.

What are the growth and achievements of Coca-Cola company? ›

With more than 500 brands available in more than 200 countries, Coca-Cola is the largest beverage manufacturer and distributor in the world, one of the largest corporations in the United States, and one of the most successful brands in marketing history.

How has Coca-Cola grown? ›

We began building our global network in the 1920s. Our global growth expanded during World War II when Coca‑Cola President Robert Woodruff believed that every American service man and woman should have a co*ke at their disposal, no matter where they were or the cost to the company.

What is the strategy formulation of Coca-Cola? ›

Strategy Formulation of Coca-Cola  Coca-Colas' strategy formulation consists of a mixture of differentiation, cost leadership and integration  Differentiation is a strategy that involves a company making their products different and more attractive than what is offered by their competitor  Integration: co*ke decided ...

Top Articles
Latest Posts
Article information

Author: Margart Wisoky

Last Updated:

Views: 6221

Rating: 4.8 / 5 (58 voted)

Reviews: 81% of readers found this page helpful

Author information

Name: Margart Wisoky

Birthday: 1993-05-13

Address: 2113 Abernathy Knoll, New Tamerafurt, CT 66893-2169

Phone: +25815234346805

Job: Central Developer

Hobby: Machining, Pottery, Rafting, Cosplaying, Jogging, Taekwondo, Scouting

Introduction: My name is Margart Wisoky, I am a gorgeous, shiny, successful, beautiful, adventurous, excited, pleasant person who loves writing and wants to share my knowledge and understanding with you.