COMPANY DESCRIPTION

The Coca-Cola Company (Coca-Cola or 'the company') is a manufacturer, distributor and marketer of non-alcoholic beverage concentrates, syrups and finished sparkling and still beverages. The company owns or licenses more than 500 brands, including diet and light beverages, waters, juices and juice drinks, teas, coffees, and energy and sports drinks. It operates in more than 200 countries. The company is headquartered in Atlanta, Georgia.

 

ECONOMIC MOAT

In our opinion Coke’s economic moat is based on powerful brand image, its strong distribution network, and economies of scale as the world’s leading beverage manufacturer.

 

OUTLOOK

Management's objective is to return to a high single-digit growth rate for earnings (excluding currency effects) in 2016 and beyond. Revenues should benefit from two-years' worth of incremental marketing and revised incentive plans that put a greater emphasis on top-line growth. Too, productivity initiatives aimed at uncovering $3 billion in annualized savings by 2019 ought to steadily gain traction and have a more noticeable positive impact on operating profits next year. KO owns 16% of Keurig Green Mountain, and is working with the maker of pod-based, hot-beverage machines on a new ``Keurig Kold'' system that will hit the market this fall and feature Coke-branded drinks.  KO alos has a 17% stake in Monster Beverage. The transaction, which aligns Coke with one of the leading brands in the fast-growing energy drink market. KO’ stock possesses a number of attributes that will appeal to conservative investors,

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STRENGTHS

  • Dominant market presence built on strong brand portfolio

  • Strong bottling partnerships

  • Strong global footprint emphasizing on emerging countries

     

WEAKNESSES

  • Product quality issues and frequent recalls 

     

THREATS

  • Regulations that affect sales at certain points of sale

  • Water scarcity and poor quality could impact production costs and capacity

  • Rising labor wages and healthcare costs in the US 

OPPORTUNITIES

  • Growing demand for functional and healthy beverages

  • Focus on growing coconut water category

  • Increased environmental concerns prompting consumers to buy environment-friendly products 

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The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.

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