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David Goodloe
David Goodloe
Articles (769) 

Can Coke Refresh Your Stock Portfolio?

September 22, 2014 | About:

“The pause that refreshes.” – Coca-Cola advertising slogan (1929)

Drinking a Coca-Cola (NYSE:KO) is a trip down Memory Lane for many people. Personally, I associate the taste of Coke with halftimes of the basketball games at the small college where my father taught when I was growing up. He would take my younger brother and me to the games.

At intermission, everyone would crowd into the lobby of the gym and descend upon two old-fashioned soft drink-dispensing machines that were located there, the kind that dispensed Coke and ice in small paper cups. As a child, I was fascinated by the automated process of a paper cup being put into position where first ice cubes would drop into it and then a pre-measured amount of Coca-Cola would be poured into it.

There were no other concessions available, and lines formed quickly at those machines. Sometimes the machines would run out of Coke before you could get to the front of the line. That was the only flavor available; if the Coke ran out, you would have to settle for a gulp or two from the water fountain if you were really thirsty – so my brother and I would make a beeline for the lobby in the final seconds of the first half. We wanted to stake out our spots in line. We didn’t want to have to drink water – or, at least, I didn’t – although there were times when we had no choice.

For me, the tart flavor of ice-cold Coke sliding down my throat, already parched from the heat given off by all the people packed into that tiny gym, was the best part of going to a small-college basketball game – or, for that matter, high school football games on Friday nights. The ice in the cup always made a nice chaser before it melted, a perfect contrast. “The pause that refreshes” was never just a slogan.

I haven’t seen one of those machines in years – they probably don’t exist anymore – but the Coca-Cola product line has changed – a lot. It seems Coke has been trying to reinvent itself for decades, tinkering with old products (i.e., the ill-advised introduction of New Coke 30 years ago) and diversifying with new ones (the additions of teas, bottled water and other unsweetened drinks).

Health concerns have caused problems for Coke and other soft drink manufacturers in recent years. Nutritionists warned that sugary soft drinks were promoting obesity in the American diet, and Coke, like its competitors, sought to reassure consumers that it was health conscious by putting low-sugar, low-calorie versions on the market.

Such an objective has been made more complicated by bad publicity. A Walmart (NYSE:WMT) in Buffalo, New York, was caught marking up 12-packs of Coke by 50 cents and claiming it was a state “sugar tax.” More than 65,000 12-packs were sold at the higher price.

But, recently, Coke made a concession to consumer demand that had nothing to do with health interests. Last week, it began selling Surge, a high-sugar, high-caffeine drink that was originally marketed in the 1990s as a competitor with Mountain Dew, a PepsiCo Inc. (PEP) product, for citrus soda drinkers. The drink was discontinued in 2001.

Now, because of the efforts of diehard Surge fans who have missed their favorite drink, Coke has brought it back – kind of. It is not being sold in stores – yet – but it is available online through Amazon.com (NASDAQ:AMZN).

Coke says Surge is its first discontinued product to be brought back to the market.

About the author:

David Goodloe
I'm a journalist by training. I grew up in Arkansas and earned my B.A. at the University of Arkansas. I earned my master's degree at the University of North Texas. My background includes stints at newspapers in Arkansas and Texas and teaching news writing and news editing to students at the University of Oklahoma and Richland College here in Dallas. I'm a writer/editor at GuruFocus.

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