Coca-Cola Juices Up Presence In Africa And Tops U.S. Brand List

by Trefis Team
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Coca Cola
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Coca-Cola Co (NYSE:KO) hopes to leverage its strong brand name and boost investments to expand presence in Africa. It recently added a juice manufacturing plant in Kenya as part of its Sh5 billion ($60 million) investments it plans to spend in the country over two years that began in April 2011. [1]

Last year, the company launched Minute Maid in Tanzania, Kenya and Uganda as well. The stock has gained more than 10% year in 2012 buoyed by strong earnings in the first quarter. The company currently competes with companies like PepsiCo (NYSE:PEP) and Dr Pepper Snapple Group (NYSE:DPS) and other local players.

We estimate a $76 price for Coca-Cola, which is in line with the market price.

See our full analysis for Coca-Cola

Middle East and Africa Remain in Focus

The move will not only help increase the capacity but will also fend off competition from companies such as Kevian and PepsiCo. Last year, the company spent $980 million to buy a 49% stake in Aujan industries, a move that should shore up its presence in the Middle East and North African markets. Besides this, Coca-Cola has also been rumored to buy Nichols, the company that supplies Vimto concentrate to Aujan. Vimto is sold in more than 65 countries. [2]

Back Home, Coca-Cola is the Most Powerful Brand

According to CoreBrand, a consultancy firm, Coca-Cola is the most powerful brand in the U.S. followed by Hershey and Harley-Davidson. The report shows just how strong Coca-Cola’s brand name is as this is the fifth year in a row the company has topped the rankings. [3]

Maintaining a powerful brand name is important, specifically for beverage companies as the ones which are able to connect with consumers are the companies which end up selling the most. Moreover, since there is little product differentiation, consumers tend to subconsciously prefer beverages that evoke a positive response. Besides, the companies which are able to consistently do well domestically often extend their performance internationally.

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Notes:
  1. Coca Cola stakes Sh5 billion to reclaim market stature, standardmedia.co.ke, April 12, 2012 []
  2. Vimto could be Coca-Cola target, says analyst, menmedia.co.uk, May 2, 2012 []
  3. Coca-Cola tops brand list, warc.com, May 3, 2012 []
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