Soft drinks have been a hit among people from all age groups. Coca-Cola Co (KO, Financial), 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.
Through the world's largest beverage distribution system, consumers in more than 200 countries enjoy our beverages at a rate of 2 billion servings a day.
Fourth quarter results
- Global volume growth of 2% for the full year and 1% in the quarter
- Reported net revenues declined 2% in the quarter; excluding the impact of structural items, comparable currency neutral net revenues grew 4%
- Fourth quarter reported EPS was $0.17; comparable EPS was $0.44
- Gained global value share in nonalcoholic ready-to-drink beverages in both the quarter and full year
- Full-year cash from operations increased to $10.6 billion
Performance highlights
- KO gained global value share and held volume share in nonalcoholic ready-to-drink (NARTD) beverages in the quarter. Additionally, it gained global volume and value share in sparkling and still beverages as well as in the juice and juice drinks, ready-to-drink tea and packaged water categories as we continue to strengthen its brands and product portfolio across key markets and categories.
- Global sparkling beverage volume grew 1% in both the quarter and full year driven by growth in brand Coca-Cola, Sprite and Fanta. Brand Coca-Cola was up 1% in the quarter and grew slightly for the full year, rounding to even.
- Global still beverage volume grew 2% in the quarter and 4% for the full year driven by growth in ready-to-drink tea, sports drinks and packaged water. Volume growth in these beverage categories was partially offset by a decline in juice and juice drinks, due in part to price increases to cover higher input costs.
It continues to take steps to strengthen its brand portfolio in fast-growing categories and key markets as evidenced by the addition of Gold Peak tea, FUZE TEA and I LOHAS mineral water to its portfolio of billion-dollar brands, bringing the total number of billion-dollar brands to 20.
More room to grow
The company is currently working toward achieving the 2020 vision of doubling system revenues. The company revealed that India is a lucrative strategic growth market. The company had lined up $5 billion until 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.
The company is highly popular across the globe. One of the reasons that Coca-Cola resides in the No. 1 market spot lies in the fact it maintains a 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 by 2020 expected to become the fifth largest in the world from its current seventh position.
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 of 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 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 times to come.
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. Coca-Cola offers constantly growing dividends with stable price appreciation. The company also backed its return with a solid financial position. Coca-Cola's future lies in emerging markets expansion and non-carbonated beverages such as Honest Tea and Minute Maid Juice.
The company is looking to shift its focus toward franchising. This means Coca-Cola is moving its revenue base more towards fees instead of sales. With the move in revenue generation, I think Coca-Cola will sustain its returns over the long term.
(Source: Company’s Website)
