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Dunkin Brands Deals with Coca-Cola

Zacks Equity Research

What better than to sip Coca-Cola while you relish your favorite doughnuts and ice creams? The recently-announced multi-year agreement of Dunkin' Brands Group, Inc. (DNKN) with cola giant The Coca Cola Company (KO) has just made that possible.

By virtue of the agreement, Dunkin' Brands’subsidiaries, Dunkin' Donuts and Baskin-Robbins, will be adding Coca-Cola soft drinks to their product line up. Coca-Cola’s popular beverages such as Coca-Cola, Diet Coke, Coke Zero and Sprite will be served in more than 9,400 Dunkin' Donuts cafes and Baskin-Robbins ice cream shops across US. Alongside, Coca-Cola will provide a range of juices, enhanced waters and energy drinks. The Coca-Cola products are expected to be available at all the Dunkin' Donuts and Baskin-Robbins restaurants by August this year. The companies are also planning to enter into marketing and promotional programs to popularize their brands.

Very recently, Coca-Cola announced the opening of its 42nd bottling plant of Coca-Cola in China. The bottling plant will be located at Liaoning and will be the largest production facility of Coca-Cola in the Chinese region. Coca-Cola has already invested approximately $160 million in the Liaoning plant, as part of the company’s $4 billion investment plan in China over the next three years. Currently, Coca-Cola has four production lines already operating under the new plant. Coca-Cola plans to invest in nine production lines at the new facility.

Our Recommendation

We currently have a long-term Neutral recommendation on both Dunkin' Brands Group, Inc. and The Coca-Cola Company. The stocks carry a Zacks #3 Rank (a short-term ‘Hold’ rating).

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