The Coca-Cola Company (KO): This Beverage Company Is a Reliable Value Creator

PepsiCo, Inc. (NYSE:PEP)’s snacks business, in an interesting way, serves the cause of both rivals. It gives PepsiCo a fantastic buffer for any volatility in its beverage business. It also serves Coca-Cola by allowing PepsiCo, Inc. (NYSE:PEP)’s resources to be shared between the food and beverage business, which allows the former to compete more easily with the latter.

North America’s third largest soft drinks maker, Dr Pepper Snapple Group Inc. (NYSE:DPS), also competes with Coca-Cola and PepsiCo, Inc. (NYSE:PEP), but mostly at a national level. It has some solid brands like Dr. Pepper, 7-Up, Hawaiian Punch, and Mott’s apple juice. Out of the top 10 ranking non-cola soft drinks in the U.S., six belong to Dr Pepper.

Dr Pepper Snapple Group Inc. (NYSE:DPS) may also be harboring some ambitions about the lucrative Asian markets. It recently re-acquired distribution rights of its Snapple brand tea, juices, and some other non-carbonated beverage brands from Mondelez International Inc (NASDAQ:MDLZ). However, the company is not expecting any material impact on sales as yet.

Opportunities in still beverages

Coca-Cola has already grown some of its non-carbonated beverage offerings into $1 billion brands. Examples are Vitamin Water, Minute Maid, Dasani, Nestea, Odwalla, Powerade, and more. The company is enjoying good growth in still beverages in most markets. In the first quarter, still beverages grew 6% in North America, 11% in Latin America, and 26% in Eurasia and Africa.

Coca-Cola is growing this business steadily. Recently, it acquired the leading European juice brand, Innocent. The company will leverage Innocent’s European channels to push its other brands in Europe, while back home, it will use Odwalla’s network to push Innocent juices.

Bottom line

Coca-Cola’s prospects remain as solid as ever. The company is poised to grow its revenue and earnings from incremental opportunities in new markets and growth in still beverages business. It is making good investments, which should deliver good returns going forward.

Gaurav Basu has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and PepsiCo. The Motley Fool owns shares of PepsiCo.

The article This Beverage Company Is a Reliable Value Creator originally appeared on Fool.com and is written by Gaurav Basu.

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

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