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Coca-Cola (KO) Zero Sugar Gets Better: Will it Aid the Stock?

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While beverage companies are getting conscious about the ingredients of their drinks, The Coca-Cola Company KO has revisited the recipe of its popular Coca-Cola Zero Sugar to give it a refreshing taste and new packaging. Rising health consciousness along with the demand for fresh flavors has been driving the sale of beverages in recent times. Keeping the trend in mind, Coca-Cola has optimized the flavors of the existing Coca-Cola Zero Sugar, while retaining its core ingredients and nutritional content.

The company has also made the packaging of the drink more attractive to increase its appeal among consumers. The drink with the new look and refreshed taste will hit the store shelves in the United States this month. The company plans the drinks’ full nationwide distribution in the United States and Canada to be effective in August along with a complete distribution expected to be achieved in September. The cola variant is already available across Europe and Latin America.

The company plans a launch celebration to unveil the newer Coca-Cola Zero Sugar in New York through an event coinciding with the “Manhattanhenge” event on Jul 13 at 7:30 p.m. “Manhattanhenge” is an event when New Yorkers go to witness the spectacular sunset, wherein the sunset perfectly aligns with east-west-oriented streets, enclosing the sun between skyscrapers as it dips below the horizon. “Manhattanhenge” will occur this year between Jul 12 and Jul 13 in New York City.

Coca-Cola Zero Sugar, launched in 2005, had a reformulation in 2017 to bring its taste closer to the iconic Coca-Cola drink. Since the reformulation, the brand has been consistently delivering double-digit growth.

In first-quarter 2021, the Coca-Cola trademark improved 4% on strong gains in the Asia Pacific and Latin America as well as Coca-Cola Zero Sugar. Notably, Coca-Cola Zero Sugar improved 8%, backed by strength across all geographic segments.

What the Launch Holds for the Stock?

Coca-Cola has always been keen on innovation to differentiate its products from market competitors. The step is likely to keep it on-trend with the rising demand for functional and healthy drinks, which are also flavorful. The move comes after Coca-Cola Zero Sugar remains in stiff competition with PepsiCo’s PEP Zero Sugar variant. The reformulation is likely to expand the market share for the product amid the evolving trends.

In the evolving beverage industry, the company is poised to gain from strong volumes for its trademark Coca-Cola, sparkling flavors, and the nutrition, juice, dairy and plant-based beverage category.

The company also remains committed to restructuring its growth portfolio by actively transitioning brands to powerful trademarks. In an effort to streamline its portfolio, the company discontinued its energy drink line in North America in May 2021. It has also been maximizing shelf space with new and higher-velocity products to fuel growth. Coca-Cola is highly focused on disciplined resource allocation to cash in on the biggest opportunities, while making quick portfolio decisions.

Apart from this, Coca-Cola is steadily witnessing a splurge in e-commerce, driven by a shift in consumer behavior amid the coronavirus outbreak. The company is accelerating investments to expand its presence in the digital channel more than the pre-pandemic levels. It is consistently strengthening consumer connections and further piloting various digital-enabled initiatives through fulfillment methods to capture the online demand.

Shares of Coca-Cola have increased 3.2% in the past three months compared with the industry’s growth of 2.6%.

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Key Picks in the Consumer Staples Space

Lamb Weston Holdings Inc. LW, with a long-term earnings growth rate of 10.8%, currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Mondelez International, Inc. MDLZ has an expected long-term earnings growth rate of 8.6%. It presently carries a Zacks Rank of 2.


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CocaCola Company The (KO) : Free Stock Analysis Report

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