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Coca Cola Launches First Herbal Drink

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Bloomberg Businessweek recently reported that cola giant The Coca-Cola Company (KO) has introduced its first herbal tea drink called Habu, in yet another effort to expand beyond its traditional soft drinks.

Launched in Thailand, Habu will be available in 9.5 ounce bottles, each containing 140 calories. Habu includes a blend of four herbs with health benefits, namely roselle, licorice, luo han gou and cogon grass. Roselle is a variety of hibiscus known for lowering cholesterol. Licorice eases coughs, soothes ulcers and stomach inflammation and controls blood sugar levels. Luo han guo is used as a sweetener and Cogon grass is useful for treating fever and other health conditions. Though the drink has multiple health benefits, it has been primarily designed as an everyday drink.

The latest addition to Coca Cola’s portfolio should appeal to health conscious consumers. The company already offers ready-to-drink teas under brands, Gold Peak, Honest Tea and Fuze Tea.  

Changing consumer preferences, increasing health consciousness and rising obesity concerns are affecting the demand for carbonated beverages from Coca-Cola as well as other soft drink companies like PepsiCo, Inc. (PEP) and Dr Pepper Snapple Group Inc. (DPS). Coca Cola is trying to re-invigorate its top line by introducing healthier products, innovative packaging and stronger merchandising solutions to cater to the ever-changing needs of its consumers.

Overall, we are encouraged by Coca-Cola’s global reach, strong brand power, expanding international presence, powerful global bottling network and its solid cash position. However, muted volume trends of carbonated beverages and soft economic conditions concern us.

Coca-Cola carries a Zacks Rank #3 (Hold).Another consumer staples stock that is currently doing well is Dole Food Company Inc. (DOLE), carrying a Zacks Rank #2 (Buy).

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