The CocaCola Co. - Stocks

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There are thousands of global brands that have particular dominance in specific sectors of the market, whether it is consumer goods, communication services, financials, energy, information technology, real estate, and materials. Then within those global brands, few companies have particular popularity and success, and Coca Cola is one of those companies.

Coca Cola is an iconic American multinational company that has massive fame and success all over the world. Coca Cola is everywhere and sold in more than 200 countries of the world. According to facts, almost 1.9 billion servings of numerous Coke products are consumed in a single day across the globe.

The Coca Cola Company produces, markets, and distributes carbonated beverages and syrups. The claim to fame of the company is its iconic drink ‘Coca Cola’ also called ‘Coke’ while the Coca Cola Company has a wide portfolio of products with over 500 different kinds of beverages, drinks, and syrups. Some of the renowned beverage apart from Coke includes Fanta, Sprite, Minute Maid, Schweppes, Ciel, Powerade, Dasani, Costa Coffee, Simply, Appletiser, Zico, and Aquarius. In total, Coca Cola Company has almost 3500 products in its portfolio.

Coca Cola Company has its head office in Atlanta, Georgia, USA, but operates in over 200 countries and offers more than 500 different brands to the consumers. The company mostly produces large syrup concentrates that are then distributed and sold to numerous bottlers all over the world. Coca Cola owns its main ‘Anchor Bottler’ in the US called the ‘Coca Cola Refreshments.’

Coca Cola is not only a beverage giant but one of the most valuable and successful business company. The brand value of the company increased by 19% and added $36.2 billion to the revenue. Coca Cola has the strongest brand value across the entire food and non-alcoholic drink sector.

On average more than 10,000 different drinks made from Coca Cola are consumed in a single day, and almost 3.1% of total beverages consumed are Coca Cola products. The company makes hundreds of different beverages that even if you drank one drink every day, it would take you 9 years to taste them all. Coca Cola has over 86,200 employees.

Coca Cola has revenue of more than $35 billion, which is more than entire economies of most countries, and if compared, it would put Coca Cola in 84th position as the largest economy and ahead of Costa Rica. The estimated value of Coca Cola is worth $74 billion, which is more than the combined value of other beverage makers, which includes Pepsi, Budweiser, Red Bull, and Starbucks. Coca Cola shares are ranked Number One when it comes to blue-chip stocks, and investors can rely on regular, healthy, and dependable dividends.

History of Coca Cola

Coca Cola was first introduced in Atlanta in 1886 by John S. Pemberton, who was a pharmacist by profession. However, the name and logo were given by Pemberton’s bookkeeper Frank Robinson; the company still uses the flowing script of Coca Cola in red and white. The drink made by Pemberton was marketed as a ‘nerve tonic’ and a drink that relieves exhaustion.

Pemberton first made a liquid mixing cocoa leaf extracts, water, sugar, kola nuts, and added caffeine, and the mixture was termed as a remedy for headache. Pemberton further researched and tested his formula for the liquid and said that it could be consumed to ease indigestion and relieve exhaustion.

In 1889, an American businessman Asa Griggs Candler bought the drink formula, and Coca Cola Company was formed in 1892. In 1919, the Coca Cola Company was bought at $25 million by a group of people led by Ernest Woodruff. The group of businessmen was incorporated as Delaware Corporation, and Initial Public Offering (IPO) was put up on the New York Stock Exchange (NYSE) for $40 per share. The ticker symbol was ‘CCO,’ but later it was changed to ‘KO’ in 1923.

Coca Cola was listed in the 30 exclusive stocks of the Dow Jones Industrial Average in 1932 and 1935 and again become a part of the index in 1987. Since 1969, Coca Cola has paid its shareholders a dividend amount that increases after every year. Coca Cola garnered tremendous fame and market capitalization in the 1980s that it got the attention of world-renowned investor Warren Buffet who invested in Coca Cola through his firm, Berkshire Hathaway, in 1988. Warren Buffet has 9.3% control in Coca Cola.

The company’s stock has split into 11 occasions throughout its history and in 1927, 1935, 1960, 1965, 1968, 1977, 1986, 1990, 1992, 1996, and 2012.

Throughout its business history, Coca Cola has acquired many business companies and startup organizations to expand its portfolio and diversify its product range. Some of the notable acquisitions made by Coca Cola include

• Minute Maid in 1960
• Thums Up in 1993
• Barq in 1995
• Odwalla in 2001 for $181 million
• Fuze Beverage in 2007 for $250 million
• Honest Tea in 2011 for $43 million
• Zico in 2013
• Monster Beverage in 2014 for $2.15 billion
• Topo Chico in 2017
• Costa Coffee in 2019 for nearly $4 billion from Whitbread.

Current Business and Investment of Coca Cola

Coca Cola has a dominant position in the US Drinks market and enjoys a 42.8% market share while rival brand Pepsi has a market share of 31.1%. Coca Cola is a well-established brand, but still, the company spends more money on advertising as compared to the combined spending of Apple and Microsoft. As Coca Cola is sold in more than 200 countries, to manage the vast business the company is divided into six categories which are

• North America
• Latin America
• Europe, Middle East, and Africa (EMEA)
• Asia Pacific
• Bottling Investments
• Global Ventures

Coca Cola is the world’s largest beverage producer and distributor. The company owns, produces, markets, and distributes beverage concentrates, syrups such as fountain syrups, and still and finished sparkling beverages. The product line of Coca Cola includes

• Carbonated Drinks
• Flavored Water and Enhanced Water
• Diet range of drinks
• Juices and Juice Drink
• Ready to Drink Teas and Coffees
• Sports Drinks
• Energy and Dairy Drinks

Coca Cola runs its expansive business in a franchise based distribution system where the beverage products are sold through a defined network of bottling distributors either owned by the company or by individual bottling retailers, wholesalers, and distributors. Coca Cola has redefined its product range according to popular trends and consumer sentiment, which is also the reason for the continued success of the company. The Coke Zero brand was specifically launched to cater to consumers who had reservations on the sugar content on the available carbonated drinks.

Risk and Potential in Coca Cola Environment

Coca Cola is a global brand and popular everywhere in households, restaurants, hotels, cafes, shops, and offices. Coca Cola is the largest beverage manufacturer in the world, and the company has remained the most valuable company in the world for more than a decade. Coco-Cola offers more than 500 different products, and within those products, there are dozens of varieties.

Coca Cola is the most widely consumed liquid after water, and the company constantly tries to reinvent and redefine its product range according to the preferences of its consumers. SWOT analysis is a common tool that can help Coca Cola to benchmark its current performance and determine prospects for the growth of the business. The SWOT analysis of Coca Cola is given by

• Strengths

Coca Cola has the highest brand equity among all the global brands. The sales of Coca Cola is the largest when the entire food and beverage sector is taken into account. The company has a global reach in more than 200 countries and with over 500 brands on offer. Coca Cola has an efficient supply chain network and quite effective advertising campaigns. The company also practices water conservation and recycling and other Corporate Social Responsibility campaigns on a massive scale. Coca Cola has quite a big loyal following all over the world.

• Weaknesses

Coca Cola products have always been criticized for their high sugar content, and the company always works to deliver carbonated drinks in the diet category. Coca Cola has few options when it comes to healthy beverages and fruit juices. Coca Cola has low product diversification as compared to its rival Pepsi, which has many popular brands in the food segment. The brand image of Coca Cola was also considerably damaged when traces of pesticides were reported in the beverages.

• Opportunities

Coca Cola can diversify its products in the food and health segment to cater to a wider and health-conscious consumer base. The company can acquire other beverage making companies to diversify its portfolio. Coca Cola can advertise its lesser known products that have the potential to be popular among the targeted audience. Hygiene is becoming important all over the world, and Coca Cola can develop more robust plans for delivering packaged, clean, and healthy water. Coca Cola has a brand name Kinley, but its progress is quite slow.

• Threats

Coca Cola operates in more than 200 countries, which means the company has to comply with all kinds of different government rules and regulations. The threat also comes from a huge population that avoids consuming carbonated drinks due to high sugar content that can lead to obesity and diabetes. Coca Cola faces challenges from the global economic recession, inflation, and instability. Coca Cola also has considerable competition from rival US brand ‘Pepsi’ which is another global brand with wide diversity in beverage and food products. Other competitors of Coca Cola include Nestle, Red Bull, Gatorade, and Danone.

Stock Analysis of Coca Cola

Coca Cola is listed and actively trades on the New York Stock Exchange (NYSE) with the ticker symbol ‘KO.’ The company is listed under the ‘Consumer Non-Durables’ Sector, and the industry is ‘Beverages: Non-Alcoholic.’ Coca Cola is also an active member of other indices that include the Dow Jones Industrial Average (DJIA), S&P-100 Index, S&P-500 Index, and Russell 1000 Index.

The all-time high share price of Coca Cola was $60.13 on February 21, 2020, and the average price in the last 52 weeks is $51.27.

In 2020, the stock value of Coca Cola fell 40% in the first quarter, which was the most significant decline after the 2008 global recession. The sales and revenue are massively disrupted due to ongoing Coronavirus that has impacted the business of Coca Cola all around the world. Since March 2020, the stock value has improved and gained 20% to move in the current values, which are from $45 to $48.

The share price was at a high value of $60 in February but fell as the Covid-19 cases peaked, particularly in the US. The global spread of the Coronavirus has affected the consumption of Coca Cola beverages, and there is low consumer spending. However, as the restrictions are eased, and businesses are slowly reopening, Coca Cola can expect to meet its financial targets. In the recently issued Q2 financial report by Coca Cola,

• The net revenues were down 28% to $7.2 billion
• The operating income fell 34%,
• Earnings per Share (EPS) declined 32% to end at $0.41.
• Cash flow from operations was down 38% at $2.8 billion

Analysts suggest that once things get settled after the Coronavirus subsides, then Coca Cola will again increase its sales and revenue generation. Coca Cola has a big balance sheet and usually stable earnings. The profits of the company are more than expected, but revenue has fallen just short.

The information above is for education purposes only and cannot be considered as investment advice. Past performance is not reliable indicator of future results.