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This Cola Company is Here to Stay

August 19, 2014 | About:
TaniaC

TaniaC

2 followers

Soft drinks are an all-time favorite among people of all ages. The Coca-Cola Company (KO), being the leader in the beverage industry, is constantly innovating new products and techniques for its valued customers. Over the years, this company has also provided a decent return to its valued investors.

Today, there's no question that consumers are much more empowered. The social media scene is exploding, and gone are the days when you simply needed to create impressions about your brands with consumers. Now it's all about expressions — communicating in a dialogue with consumers to meet their expectations. Take the Coca-Cola Facebook page as an example, which has more than 76 million likes. It is the largest Facebook page of any single brand.

The Coca-Cola Company is the world's largest beverage company, refreshing consumers with more than 500 sparkling and still brands. Led by Coca-Cola, one of the world's most valuable and recognizable brands, the company's portfolio features 16 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle.

Performance at a glance

Global unit case volume grew 3% in the quarter and 2% year to date. Coca Cola International volume grew 3% in the quarter while North America volume was even. Sparkling volume and brand Coca Cola volume accelerated in North America, Eurasia and Africa, Europe and Asia Pacific in the quarter.

Long- term strategic partnership

KO is set to purchase 16.7% Equity Stake in Monster (MNST) beverages. Monster is to Become KO’s Exclusive Energy Play. KO is to expand Monster Beverages distribution in the U.S. and Canada and become Monster’s preferred Global distribution partner. Both the companies have entered into definitive agreements for a long-term strategic partnership that is expected to accelerate growth for them in the fast-growing, global energy drink category. The new, innovative partnership leverages the respective strengths of KO and Monster to create compelling value for both companies and their shareowners.

Importantly, the partnership strategically aligns both companies for the long-term by combining the strength of the Coca-Cola Company’s worldwide bottling system with Monster’s dedicated focus and expertise as a leading energy player globally. Pursuant to the terms of the transaction agreements at the closing, the Coca-Cola Company will make net cash payment of $2.15 billion and transfer its worldwide energy business to Monster.

“The Coca-Cola Company continues to identify innovative approaches to partnerships that enable us to stay at the forefront of consumer trends in the beverage industry,” said Muhtar Kent, chairman and CEO of the Coca-Cola Company. “Our equity investment in Monster is a capital efficient way to bolster our participation in the fast-growing and attractive global energy drinks category. This long-term partnership aligns us with a leading energy player globally, brings financial benefit to our Company and our bottling partners, and supports broader commercial strategies with our customers to bring total beverage growth opportunities that will also benefit our core business.”

Far-reaching global acceptance

Coca-Cola's presence is felt across the globe. One of the reasons that Coca-Cola holds the No. 1 market spot lies in the fact it maintains a worldwide presence all over the globe. India, Indonesia and China hold huge potential for this company, leaving plenty of room for it to expand. Coca-Cola India is aiming to get back on to the double-digit growth trajectory over the next year as it focuses on the Indian market, which is expected to become the fifth-largest in the world from its current seventh position by 2020.

The company said it is working towards achieving the 2020 vision of doubling system revenues and servings and revealed that India would be a strategic growth market vis-a-vis that goal. The company had lined up $5 billion till 2020 in India. With a per capita consumption of 14 per year for Coca-Cola products, as compared to the global average of 94, the Indian market offers huge opportunity for growth.

To end

People are now much more health conscious as the rate of obesity is accelerating at a great pace. Sugar, being the most important ingredient in soft drinks, is the main contributor to obesity. Health consciousness has paved the way to a decline in the consumption of carbonated soft drinks and diet soda in the U.S. market. The only reason for this is numerous health problems such as weight gain, poor dental health, diabetes and cardiovascular disease.

There is an indication that the company will keep its history of consistently increasing dividends. With the recent details of its financials, Coca-Cola is expected to quench the thirst of its consumers in the future. An increasingly evolving middle class, higher disposable incomes and changing lifestyles are key factors that will fuel growth of this company in the beverage industry.


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