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Coca-Cola Offers Caffeine Free Coke

Zacks Equity Research

The Coca-Cola Company (KO), the largest global producer and marketer of beverages, recently announced the introduction of Caffeine Free Coke Zero for consumers who like to have a Coke even later in the day.  The new product will be available for sale from mid July. Caffeine Free Coke Zero will come in packs of 12 cans and 2 liter bottles.

Coke Zero is a very successful brand, generating about $1 billion in global revenues.  There is an increasing demand for caffeine free products.  The latest addition of caffeine free products should appeal to health conscious consumers. Caffeine Free Coke Zero gives consumers the option to enjoy Coke without being concerned about calories or caffeine intake.

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 sales of its soft drinks by introducing new stevia (a non-nutritive sweetener) based 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. Moreover, the integration of Coca-Cola Enterprises’ Bottling business and the company’s productivity initiatives are expected to result in significant cost savings. However, muted volume trends of carbonated beverages and soft economic conditions concern us.

Coca-Cola carries a Zacks Rank #3 (Hold).

Another company in the consumer staple sector, which is better positioned at current levels is Energizer Holdings Inc. (ENR), carrying a Zacks Rank #2 (Buy).

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