Leading beverage company with unparalleled brand recognition worldwide. In 2021, Coca-Cola was estimated to have a brand value of cUSD75bn (Statista), making it the most valuable soft drink beverage brand globally with Red Bull trailing in second place with a brand value of USD14.9bn. Globally, Coca-Cola was the sixth most valuable brand overall, behind Apple, Google, and Amazon. Coca-Cola was ranked the top carbonated soft drink in the US with a market share of 45%, with Pepsi-Co far behind in second place with c25% of the US market.
Innovation in the carbonated soft drinks (CSD) segment and pivot to healthier drink alternatives. KO is one of the top innovators in the beverage market and remains highly focused on refreshing its product range to keep current with consumer preferences and trends. The company has rejuvenated many of its products over the last few years. This includes renewing the standard Coca-Cola line with Coke Energy, Coke with Coffee and AHA, etc. There has also been an increase in demand for healthier beverage options as consumers grow increasingly wellness-focused. This has resulted in new products including new sparkling water options and low-calorie CSD in a range of new flavours.
Successful shift to asset-light model to support margins and long-term growth supported via geographic exposure to faster growing developing markets. KO has transitioned to an asset-light model over the years, a process which included refranchising and lowering its exposure to capital-intensive and lower margin bottling operations. Currently, KO mainly sells concentrates for its main beverages, which drives higher margins and allows it to focus on marketing and business development efforts. Despite KO's already market-dominant position in the US, there remains a long runway for growth in developing markets as well. According to management, only c30% of beverage consumption in the developing market is commercialised and KO only has c7% market share currently. With over 6bn people in the developing market (representing 80% of total world population), the growth potential is immense.
Risks
KO may face cost and margin pressures as wage and commodities costs rise. The company has to constantly innovate to appeal to the increasingly health-conscious consumer. There has been increased regulation from several governments globally regarding ingredients in soft drink beverages, with a particular focus on reducing sugar content in such drinks. Given their global footprint, unexpected macroeconomic situations or foreign exchange fluctuations could affect income.
DYODD :)
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Nice