Coca-Cola’s 20 Billion Dollar Brands & Future Growth

Emerging Brands

Coca-Cola’s 20 billion dollar brands give it an unrivaled portfolio of high quality beverages to drive profits. The company must continuously create or acquire new brands to drive further growth and stay ahead of industry trends. Coca-Cola’s Venturing & Emerging Brands division is responsible for finding ‘the next big thing’. To use a baseball analogy, the Venturing & Emerging Brands division is Coca-Cola’s farm system. Once a brand graduates, it hits the ‘big leagues’ and gets to utilize Coca-Cola’s unrivaled distribution system.

The Venturing & Emerging Brands division looks for new niche or upcoming beverage brands with at least $10 million or more in sales. It invests in these brands and works with them to reach at least $75 million in annual sales. Once that number is reached, the brand is eligible for moving into the corporate Coca-Cola business.

The Venturing & Emerging Brands division was created in response to the Glaceau acquisition. Coca-Cola acquired Glaceau for $4.1 billion – a steep price for a business with less than $400 million in annual revenues. The Venturing & Emerging Brands division can save Coca-Cola billions by indentifying promising brands and acquiring them before they reach the size of Glaceau.

The Fuze, NOS, and Honset Tea brands are the biggest success stories so far at the Venturing & Emerging Brands division. Fuze in particular has done exceptionally well and reached billion dollar brand status in 2014. Coca-Colaacquired Fuze beverages in 2007 for around $250 million.

Coca-Cola bought 40% of Honest Tea in 2008 for $43 million. The company purchased the remainder of the company in 2011. Since Coca-Cola was exercising an option to purchase the entire company made in a deal in 2008, Coca-Cola likely paid under $150 million for the entire business, but the exact details are not disclosed. Honest Tea generated an estimated $130 million in sales in fiscal 2014. Coca-Cola is quickly expanding the Honest Tea brand. Honest Tea now has an exclusive deal with Wendy’s (WEN) to sell tea at the hamburger retailer. In addition, Coca-Cola has introduced Honest Fizzorganic zero calorie sodas to capitalize on the Honest brand name.