Although Coca-Cola Co (NYSE:KO) is best known for its namesake soft drink Coca-Cola, its actually the non-fizzy drinks (or “still beverages” as the company likes to call it) that are driving the most growth for the company. With investments and marketing spends lined up for Minute Maid juice and bottled water brands combined with the recent roll out of the low calorie version of Honest Tea, the company looks set to capitalize on the growing demand for still beverages (or Non-Carbonated Soft Drinks). Coca-Cola currently competes with companies like Pepsi (NYSE:PEP) and Dr. Pepper Snapple Group (NYSE:DPS) and other local players. We estimate a $71 price for Coca-Cola, which is slightly above the market price.
Tea, Water and Juice Remain Focus Points
Coca-Cola prepares life sans Nestle in the iced tea category by launching a new, low sugar version of Honest tea.  Coca-Cola first bought a 40% stake in Honest tea in 2008 but acquired the remaining company in 2011.
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In juices, Coca-Cola will invest $100 million in its Auburndale plant in Florida in 2012 to expand the production of its ‘Simply’ line of products. The “Simply” brand of products fall under Minute Maid, which contributes 8.1% to the overall stock price as per our estimates. It currently has a market share of 14% which we expect to increase to 14.6% by the end of our forecast period.
In Belgium, Coca-Cola is introducing Minute Maid in new packaging which the company believes scores the highest in terms of convenience, attractiveness and purchase intent.  In 2011, Minute Maid was relaunched in the country to appeal to a younger generation of consumers with marketing aimed to encourage consumers to use the product as a breakfast drink.
Coca-Cola is also spending a staggering $1 billion in Mexico with a greater emphasis on bottled water. The company will focus on smaller sized water servings, which can be up to 10 times more expensive, on a per unit volume basis, than traditional jugs which come in 10 or 20 liters. Coca-Cola operates in the bottled water market through its brand Ciel.
The company will extend the brand to incorporate new flavors. Overall, still beverage volume grew by 3% in the North American region whereas the international still beverage volume jumped 7% in 2011, compared to 2010.Notes:
- Honest Tea rolls out new low sugar version, drinks-business-review.com, 7 March, 2012 [↩]
- Coca-Cola Minute Maid Re-Launch in Diamond Curve Carton Across Belgium, foodingredientsfirst.com, 7 March 2012 [↩]