It is not surprising that the growth of the soda industry is slowing down. With the first warning shot by Mr. Bloomberg, it should have resounded in the hearts of KO's executives that it must begin to strategize that the future might not be sodas any longer. In fact, Mexico's proposed tax in the sugary drinks should be blarring sign that KO need to redirect this stalwart defensive and consistently paying dividend company into another category marked: other than sodas. It is my opinion that if Mexico gives in,others will follow in the South American sector. What we are talking about here is KO's growth model. Sure China and India are new areas of interest but I hate to think of what will happen to KO when they are heavily invested in sugary drinks and do not equally pursue something like water or TEA. The game is ripe to move into this sector aggressively.For example, Starbucks has begun to open their tea portfolio, and I have no doubt that somewhere in ATL: KO executives are smirking. KO should take a large bite out of this by either acquiring or developing areas of growth. KO has the distribution channels. Let's not get KO, TKO'd. Pun intended.
Mr. Buffet was right that we should ask the question, "how did we fail?" I hope for KO's sake that this answer does not come too late. Fuse, KO's small tea market segment should be broadly developed and be given the marketing campaign as their other leading brands.
I am long on KO and enjoy my KO zero as well as my Fuse tea weekly.
M&A are certainly a possibility in any field; however, as you do not give any facts regarding how this will happen it therefore is a wish.
I do like the fact that PEP has gone with Frito Lay to diversify their exposure to downtrends in the beverage sector. And as much as I would like to see KO M&A with other companies with a cash buyout or leveraging of stock, their distribution channels are second to none. Let us not even forget their brand recognition.
A plausible idea would be that they might look at the coffee segment to add to their diversification which includes, soda's, tea's, H20, and, of course, OJ. I personally like Doritos with my Coke Zero but hey you can't have it all or can we? lol. I "wish" to see a KO recycling program with their vending machines or MP3's to boot! Yes, we can wish. Are you reading this R&D :-)
Keep the faith as we hope to see dividend increases in a solid defensive stock..
Same here. KO's brand recognition is second to none. As a pure beverage play, it has and will be around for some time. PEP has now left the arena as a pure beverage play with its Frito lay and other consumer snack goods. Both are outstanding companies battling it out by investing heavily in foreign markets and new product development. I can see why The Street is keen on KO.
I like KO's response to health issues by moving more into flavored water areas, and investing in orange groves in Florida for their orange juice sector amongst other things. Yes, we are still effected by commodity prices but you have to remember that a company such as KO or PEP do not just haphazardly survive but have long term strategic plans. As Mr. Buffet says, best way to learn is from mistakes is to explore what made a company fail.
Overall, both companies are prospering and will continue to do so. Even more so, there is room to grow in this area. Just ask the folks at Soda, Starbucks, and Dr. Pepper. I am long on KO and I prefer to drink Coke Zero as my favorite soda beverage. I like the fact that I can take my soda with me and pick up one anywhere I go. Unlike Soda where I have prepare my drink just to save a few pennies. Makes me think of those off brand sodas at the supermarket that try to be like KO or PEP but fall short on the taste quality of both beverages.