The Coca-Cola Company (KO)

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  1. Latest Earnings Performance

    Coca-Cola's sales for Q2 2020 declined 28% to $7.2 billion and just met analyst expectations. Adjusted profit for the quarter came in at $0.42 per share, this was better than the $0.40 profit that Wall Street had predicted. Q2 was one of the worst performing quarters for the company in 30 years as the real impact of coronavirus and the lockdown was felt during this period. Coke's management is also looking to streamline its portfolio, with a focus on larger and more popular brands. Less than half of its 400 major brands account for 98% of the company’s revenue. KO won’t be completely abandoning smaller brands, instead, it will prioritize those that are growing

  2. FY 2019 Earnings Performance

    Coca-Cola revenues came in at $37.3 billion in 2019, marking a growth of 9% compared to 2018. Higher revenue was driven by price/mix growth of 5% and concentrate sales growth of 1%. Sparkling soft drinks grew 2%, driven by strong global growth in trademark Coca-Cola, including growth in original Coca-Cola and continued growth in Coca-Cola Zero Sugar. Water, enhanced water, and sports drinks grew 3%, led by Ciel and Cristal in Latin America and strong global growth in the sports drinks portfolio, partially offset by the impact of deprioritization of low-margin water brands in key markets, such as China and Japan. Tea and coffee volume grew 1% led by strong performance across the company's portfolio in Japan, in addition to the doğadan tea business in Turkey and Gold Peak tea in North America. Juice, dairy, and plant-based beverages remained flat as strong performance by Chi in West Africa and innocent juices in Europe was offset by a decline in Rani in the Middle East. Adjusted earnings came in at $2.11 per share in 2019, marginally higher than $2.08/share in the year-ago period.

  3. Coca-Cola looking to improve profitability under a new CEO

    The new Chief Executive Officer, James Quincey, has laid out plans to improve the Coca-Cola's profitability that goes beyond its refranchising to laying-off workers. The company plans to redesign its organization to make it faster and more agile, and as it creates a more focused, leaner corporate center and broadened enabling services, it could result in the laying off of around 1,200 workers beginning in the second half of this year and carrying into the next year.

  4. Coca-Cola restructuring its way to more profitability

    Coca-Cola is refranchising many of its bottling operations in a bid to move away from the capital intensive and low margin business of bottling, and focus more on the concentrate business as the consumption of carbonated drinks continues to slow down, especially in developed markets. Coca-Cola's net sales growth has been hurt in the last few quarters due to structural changes.
    In 2017, the company accomplished major milestones in three of its most important markets. The bottling businesses in China was sold; KO's two largest bottlers in Japan merged creating a single bottler, covering roughly 85% of the system; and most importantly, Coca-Cola completed the refranchising of its U.S. bottling operations.
    A bottling business comes with four to five times more revenue per drink sold and the accompanying cost. Thus, any impact on the sales of the bottler is going to have a magnified impact on overall sales for Coca-Cola and much less effect on the company's profits.
    Coca-Cola is, therefore, focusing more on capitalizing on profitability in the concentrate business and looking to refranchise some of its bottling investments.

  5. Coca-Cola's First Branded Energy Drink In Europe

    In March 2019, the Coca-Cola Co. decided on releasing its first energy drink under the Coca-Cola brand in Europe. KO started Coca-Cola Energy in Spain and Hungary in April. The new beverage tastes like a Coke and includes caffeine from naturally-derived sources, guarana extracts, B vitamins and no taurine. A no-sugar, no-calorie option is also available. The beverage is aimed primarily at young adults, age 18 to 35. Coca-Cola Energy is more than three-times as caffeinated as a regular Coke — 80 mg of caffeine vs. 24 mg.
  6. Acquisition of Chi Ltd

    On January 30, 2019, Coca-Cola announced the acquisition of Chi Ltd in Nigeria. Chi is recognized in West Africa as an innovative, fast-growing leader in expanding beverage categories, including juices, value-added dairy and iced tea. It produces juice under the Chivita brand and value-added dairy under the Hollandia brand, among many other products. This acquisition further signals Coca-Cola’s optimism about Africa’s consumer opportunity and a commitment to its long-term investment and growth plan on the continent, where it has been present for more than 90 years.


Below are key drivers of the Coca-Cola Company that present opportunities for upside or downside to the current Trefis price estimate:

Coca-Cola North America EBITDA Margin

  • North America EBITDA Margin : While the margins had been falling in the past, there are expected to grow positively in the future as a result of the refranchising of the bottling operations, reaching 38% by the end of our forecast period. If the commodity prices rise, offsetting any benefit received from the refranchising and the margins remain at a similar level, we could see the Trefis price estimate revised downwards by 10%. However, if the gross margins improve to 50% on account of increased cash productivity, there could be a 10% upside to our price estimate.


The Coca-Cola Company is the world’s world's largest beverage company, with more than 500 nonalcoholic beverage brands in the sparkling soft drinks; water, enhanced water and sports drinks; juice, dairy and plant-based beverages; tea and coffee; and energy drinks categories. The company owns and markets four of the world's top five nonalcoholic sparkling soft drink brands: Coca-Cola, Diet Coke, Fanta, and Sprite. Sparkling soft drinks represented 69 percent, 69 percent and 70 percent of the company's worldwide unit case volume for 2017, 2016 and 2015, respectively.


Soft drink companies adapting to changing consumer needs

Soft drink consumption is on a decline in developed countries as consumers switch to healthier alternatives such as juices, Ready-to-Drink (RTD) teas, RTD coffee, water mixers, etc. Moreover, soft drinks are prone to higher taxation due to their unhealthy nature. Hence, volume consumption is on a decline in the U.S. and Europe. Developing nations, on the other hand, offer tremendous potential in terms of volume growth. Soft drink consumption (per capita) in countries like China, India, and Brazil is still only a fraction of what it is in the developed world.

Diet soft drinks are suffering declining volumes in developed markets

Consumers have been shifting to natural and healthier beverages with less sugar and calorie content due to the health risks associated with sugary drinks. The diet counterparts have fared even worse, with the artificial sweetener aspartame being criticized for causing sugar cravings, dehydration, weight gain, and even heart diseases. Consumers have also reported bitter aftertastes of diet drinks which use the natural sweetener stevia, initially considered a bankable solution.

Coca-Cola eyeing new markets such as sparkling water

The Coca-Cola Company North America announced the acquisition of premium sparkling mineral water brand Topo Chico in the beginning of October 2017. Topo Chico will continue to be imported from Cerro del Topo Chico in northern Mexico, where it has been bottled exclusively since 1895. The company has a long history with this brand as the first Coca-Cola bottle in Mexico was manufactured at this facility. This deal has been made as a part of the company's Venturing & Emerging Brands (VEB), a business unit whose aim is to identify and nurture brands that have a billion-dollar potential. It functions like a venture capital arm of Coca-Cola that meets with brands that are mostly in the start-up phase, and which are poised for market disruption. Given that nationally, more than $2.3 billion worth of bottled sparkling water is sold every year, according to consumer market researcher Information Resources Inc., it is definitely a significant market for Coca-Cola to ply its trade.

Bottled water is growing at a fast pace globally

According to the Canadean, consumption of packaged water overtook the intake of carbonated soft drinks (CSDs) in 2015.

While growth in the bottled water category is expected to continue outpacing growth in the CSD category in the next few years, most of this growth will come from emerging markets such as China, Mexico, and India--where clean tap water is not as easily available.

Growing health concerns have prompted customers to reduce their consumption of calorie-filled beverages such as CSDs and juices. This has benefited the bottled water category, as some customers have switched to consuming bottled water instead of other sugary beverages. The U.S. is the fastest growing bottled water market outside of Asia. This trend is expected to continue and, thus, boost the U.S. bottled water market size. Bottled water overtook CSDs as America’s largest beverage category in volume in 2016.

Recent Trefis Articles

Coca-Cola Stock Recovers Almost 40% But More Gains Are On The Way

Coca-Cola stock (NYSE: KO) currently trades at $51 and is still down 6% so far this year. It traded around $59 pre-Covid in February 2020 and is more than 13% below that level. However, the stock has gained 37% since its March lows of $37, following the Fed’s stimulus package and measures announced by other economies. ...More

Can Coca-Cola’s Stock Rise Any Further?

Despite almost a 30% rise since the March 23 lows of this year, at the current price of around $48 per share, we believe Coca-Cola stock (NYSE: KO) has some upside left. KO stock has increased from $37 to $48 off the recent bottom, less than the S&P which increased by 46% from its recent bottom. ...More

Coca-Cola’s Stock At $45: More Gains?

Coca-Cola stock (NYSE: KO) has gained more than 20% since late March (vs. about 41% for the S&P 500) to reach to its current level of $45. This is after dropping to a low of $38 in late March, as a rapid increase in the number of Covid-19 cases spooked investors, and led to increased fears of an imminent global economic downturn. ...More

Coca-Cola Or PepsiCo?

Coca-Cola’s stock (NYSE: KO) price has increased by about 24% in a little over last three years, when the stock price increased from $37 at the end of 2016 to $46 as on 15th June 2020. That’s a positive for Coca-Cola. ...More

Coca-Cola’s Sales Down 16% But Stock Up 16%; Why?

Coca-Cola’s stock (NYSE: KO) gained almost 50% in 3 years, with the stock price rising from $37 at the end of 2016 to about $55 at the end of 2019. Though the stock price dropped in 2020 to $43 as of 15th May 2020 due to the COVID-19 pandemic, the stock has still registered a cumulative return of 16% between 2016 and May 2020. ...More

Is Coca-Cola’s Stock Hitting Its Decade Low Of $30 A Possibility?

Despite an almost 15% decline in Coca-Cola’s (NYSE: KO) stock since the beginning of this year as the spread of the novel Coronavirus rattled the stock markets and the broader economy, at the current price of $47 per share, we believe Coca-Cola has a significant downside if there are no signs of abatement of the crisis in May 2020. ...More

Coca-Cola’s Stock Still Too High At $45?

After almost a 22% decline in Coca-Cola’s (NYSE: KO) stock since the beginning of this year, at the current price of $43 per share, we believe Coca-Cola’s stock is likely to remain around the current level considering the impact of the ongoing coronavirus crisis. ...More

Why Is Coca-Cola’s Stock Likely To Underperform The Market Post Coronavirus?

Coca-Cola’s (NYSE: KO) stock is likely to underperform the broader S&P 500 index post coronavirus and oil price war crisis, going by the trends seen during the 2008 slowdown, where it fell 27% from the approximate pre-crisis peak in 2008, and recovered 44% by early 2010. The decline in Coca-Cola’s stock and recovery was lower than that of the S&P 500. ...More

After A Gloomy Earnings Projection Last Year, Can Coca-Cola Spring A Surprise In Its 2019 Results?

Coca-Cola (NYSE: KO) is slated to release its Q4 and full-year 2019 results on January 30, 2020. Trefis details expectations from the company in an interactive dashboard, parts of which are highlighted below. ...More

Can Coca-Cola Bridge Its Revenue Gap With PepsiCo?

PepsiCo (NASDAQ: PEP) and Coca-Cola (NYSE: KO) are the two largest non-alcoholic beverage manufacturers in the world with a range of sparkling soft drinks, juices, energy drinks, etc. ...More

Is Coca-Cola’s Stock Fairly Valued?

Based on its current market price and future growth prospects, Coca-Cola (NYSE: KO) looks undervalued at present. Trefis has a price estimate of $57 per share for Coca-Cola’s stock, higher than its current market price of $53 (as on November 19, 2019), which reflects an upside of 7.5%. ...More

How Does Coca-Cola Spend Its Money?

Coca-Cola (NYSE: KO) has its expenses largely clubbed under its cost of goods sold and SG&A expenses, which together accounted for about 87% of the company’s total expenses in 2018. However, this is a reduction from 92% of total expenses that these two cost heads accounted for in 2015. ...More

Understanding Coca-Cola’s Business Model And Performance Across Key Operating Markets

Coca-Cola (NYSE: KO) is one of the largest beverage companies with a diversified geographic presence. A] Business Model 1) What Does It Offer? Coca-Cola Revenues (How Does Coca-Cola Make Money) are generated by the sale of a variety of beverages such as sparkling soft drinks... ...More

What To Expect From Coca-Cola’s Q2 2019 Earnings Report?

Coca-Cola Company (NYSE: KO) is set to announce its Q2 2019 financial results on July 23, 2019, followed by a conference call with analysts. The company started the year 2019 on a positive note with a y-o-y revenue growth of 5.2% in Q1 2019 and Trefis expects this trend to continue through the year. ...More

What Are The Key Takeaways From Coca-Cola’s Q1 2019 Results?

Coca-Cola Company (NYSE: KO) released its Q1 2019 financial results on April 23, 2019, followed by a conference call with analysts. KO beat market expectations for revenue as well as earnings. The company reported revenue of $8.02 billion in Q1 2019, marking a growth of 5.2% over Q1 2018. ...More

What To Expect From Coca-Cola’s Q1 2019 Results?

Coca-Cola Company (NYSE: KO) is set to announce its financial results for Q1 2019 on April 23, 2019, followed by a conference call with analysts. Total revenues for Coca-Cola have largely trended lower over recent quarters, falling from $8.9 billion in Q2 2018 to $7.1 billion in Q4 2018. ...More

Can Coca-Cola Manage To Increase Its Revenue And Profitability By Slashing Its Advertising And Marketing Expenditure Over The Next Two Years?

It has been a long time since both, Coca-Cola (NYSE:KO) and PepsiCo (NASDAQ:PEP), diversified into segments other than carbonated soft drinks (CSD) by selling juices, water, sports drinks, iced coffee, snacks, and other beverages. ...More

After A Strong Performance In 2018, Outlook Turns Bleak For Coca-Cola In 2019

The Coca-Cola Company (NYSE: KO) released its Q4 2018 results on February 14, 2019, followed by a conference call with analysts. The company fell short of analysts’ expectations for revenue, primarily due to loss of revenue from the refranchising of company-owned bottling operations and the impact of currency. The company reported net revenue of $7. ...More

How Much Will Refranchising Boost Coca-Cola’s Margins in 2018?

The Coca-Cola Company (NYSE: KO) is set to announce its fourth quarter results on February 14, 2019, followed by a conference call with analysts. The market expects the company to report net revenue of $7.03 billion in Q4 2018, 6.4% lower than in Q4 2017. Adjusted earnings for the quarter are expected to be $0.43 per share compared to $0. ...More

Coca-Cola Continues Strong Organic Growth Powered By Its Diverse Portfolio

The Coca-Cola Company (NYSE:KO) announced its third quarter results on October 30, with its revenue of $8.25 billion and EPS of $0.58 exceeding consensus expectation. Even though the core performance of the company remained solid in the quarter, the top line took a hit due to the refranchising of bottling operations across geographies. ...More

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