Coca-Cola (NYSE: KO) reported strong Q2 results with growth coming from emerging markets like China and Russia. China growth was led by 23% growth in sparkling beverages and 36% growth in Minute Maid Pulpy. Minute Maid Pulpy emerged as a hit with the ‘Burst of China Joy’ integrated marketing campaign. Coca-Cola competes with companies like Pepsi (NYSE: PEP) and Dr. Pepper Snapple Group (NYSE:DPS).

Our price estimate for Coca-Cola near $72 implies roughly 5% upside to the market price.

Chinese Beverage Market

According to the market research company Euromonitor International, sales of soft drinks, including soda, juice and bottled water, almost doubled to $42 billion in China between 2006 and 2010.^[1] The same report indicated that China’s juice market should more than double to roughly $24 billion by 2015.

According to Euromonitor International, Coca-Cola held 17 percent of the Chinese market at the end of 201o. Tingyi, a well known Chinese consumer company claimed 13 percent market share with its leading drink called Master Kong while the Hangzhou-based Wahaha Group had 7 percent. PepsiCo was fourth with 6 percent share.

Coca-Cola sees huge potential for its beverages in China where per capita consumption is only 32 bottles of Coke products a year compared to 150 in Hong Kong and more than 500 in the U.S.^[2]

Coca-Cola’s China Thrust

Coca-Cola has been operating in China since 1979 and employs more than 30,000 Chinese workers and has over 40 bottling plants in China. The company is very optimistic on its expansion plans in China and expects China to contribute significantly in its ’2020 vision’ (i.e. to double its 2009 revenue of $100 billion by year 2020).

It is introducing a wider variety of package choices to promote both affordability and consumer experience. Coca-Cola is already ahead of its planned investment of $2 billion over the 3-year period starting with 2009 through 2011.

See our full analysis for Coca-Cola

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