The Coca-Cola Company (KO), Mondelez International Inc (MDLZ): Why You Should Stick With These Beverage Companies

In the test market, 7% of the volume was generated by TEN, and it contributed 40% of revenue to the CSD category. TEN is expected to roll out nationwide by the end of the second quarter of 2013. The company plans to invest around $30 million on its TEN platform in 2013 and is expecting a long-term 3%-5% revenue growth per year from TEN.

Dr Pepper Snapple Group Inc. (NYSE:DPS), with the aim of increasing its revenue and customer base, signed an agreement with Spirit Airlines Incorporated (NASDAQ:SAVE) on June 4, 2013. In this agreement, Dr Pepper and diet Dr Pepper will be added to the airline’s in-flight beverages service through 2016. The company is expecting to generate higher volumes from this deal, as its Dr Pepper will be served to more than 12 million Spirit Airlines Incorporated (NASDAQ:SAVE)’ customers. With this deal the company will increase its relationship with Spirit customers and boost its brand-building. Additionally, the agreement includes advertisement and marketing consideration and will increase the company’s brand, resulting in high-volume growth in the upcoming quarters. It is expected to generate revenue of $1.6 billion for the quarter ending June and $6.15 billion for fiscal year 2013.

Conclusion

The Coca-Cola Company (NYSE:KO), with its refranchise model and four-year Productivity and Reinvestment program, is creating a strong base for future growth. On the other hand, PepsiCo’s multiyear cost savings and the expected deal with Mondelez International Inc (NASDAQ:MDLZ) can generate a good long-term growth opportunity for the company.

Dr Pepper Snapple, with its 10-calorie TEN and tie-up with Spirit Airlines, will probably boost its revenue in coming quarters.

I recommend a buy on all these stocks.

Madhu Dube has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and PepsiCo. The Motley Fool owns shares of PepsiCo and SPIRIT AIRLINES INC. (NASDAQ:SAVE)

The article Why You Should Stick With These Beverage Companies originally appeared on Fool.com and is written by Madhu Dube.

Madhu is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.