The Coca-Cola Company (KO) recently entered into a partnership with California Pizza Kitchen (CPK), a popular restaurant chain, to provide Coca-Cola products in the latter’s 202 restaurants across the U.S. Per this multi-year product and marketing agreement, all California Pizza Kitchen units will exclusively serve Coca-Cola products by Aug 31.
California Pizza Kitchen offers authentic California style cuisine, which includes signature California-style hearth-baked pizzas, creative salads, pastas, soups and sandwiches, all of which can now be enjoyed with beverages from Coca Cola. The beverages served will include Coca- Cola, Diet Coke, Coke Zero, Sprite, juices, enhanced waters and energy drinks
Per the agreement, both the brands will also collaborate on several promotional and marketing initiatives every year, which is expected to further drive beverage consumption at all restaurant locations.
The current agreement with California Pizza Kitchen will help Coca-Cola tap the huge customer base of the restaurant company, which is expected to boost its volumes. Coca-Cola as well as other soft drink companies like PepsiCo, Inc. (PEP) and Dr Pepper Snapple Group Inc. (DPS) have been seeing sluggish volume growth for their high calorie soft drinks. Sales of these drinks are being hurt by changing consumer preferences, increasing health consciousness, rising obesity concerns, possible new taxes on sugar-sweetened beverages and growing regulatory pressures. In fact, Coca-Cola witnessed a mere 1% volume growth in the second quarter 2013, much worse than last quarter’s 4% growth.
Accordingly, Coca-Cola is trying to re-invigorate sales of its soft drinks by conducting strong integrated marketing campaigns, offering more choices to customers in package sizes, sweeteners and beverages (including more low- and no-calorie selections) and providing transparency in labeling.
Coca-Cola currently carries a Zacks Rank #4 (Sell). One beverage company that is currently doing well is Monster Beverage Corporation (MNST) carrying a Zacks Rank #2 (Buy).
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