Recently, the largest global producer and marketer of beverages, The Coca-Cola Company (KO) declared a grant of more than $2 million, a part of which would be used for supporting community health and fitness programs in North America. The company’s philanthropic segment, The Coca-Cola Foundation will award the grant.
Given the rise in lifestyle diseases, people are now concerned about the nutritional value of packaged food. As a result, most of the companies are now focusing on increasing the health quotient of their brands. The stress is on producing food products with simple natural ingredients, minimum preservatives and optimum processing.
Therefore, in order to ensure that its products continue to enjoy growing demand, The Coca-Cola Company is investing in creating a culture of healthy lifestyle in communities. With increase in physical activities and awareness of healthy food choices among consumers, the company wants to ensure that its products are not blamed for lifestyle diseases and the consumers continue to include these products in their regular life.
Though The Coca-Cola Company, a peer of Dr Pepper Snapple Group (DPS), is still largely dependent on its carbonated beverages, the company is slowly expanding its portfolio of non-carbonated drinks. As such, Coca-Cola commands a leading position in the juices or still beverages category with its flagship brands such as Minute Maid, Simply and POWERade.
Recently, The Coca-Cola Company and dairy cooperative Select Milk Producers, Inc announced their decision to purchase equity stakes in Fair Oaks Farms Brands, LLC, a company that produces and markets value added nutrition products, including Core Power, a popular high protein milk shake. Together, the companies intend to create a new portfolio of healthy beverages with high growth potential.
We are positive about Coca-Cola’s global reach, strong brand power, expanding presence outside the U.S. and its solid cash position. Though the expected moderation in commodity cost inflation is a relief, soft economic conditions and a tough currency environment going ahead concerns us.
Currently, we have a Neutral recommendation on The Coca-Cola Company over the long term. The Coca-Cola Company carries a Zacks #4 Rank in the near term (Sell rating).
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