Coca cola, the global leader in beverage industry that has quite a few brands under its name. The categories include soft drinks, sports drinks, fruit juices etc. lately, if we talk about carbonated soft drinks, their sales have been declining in the US. Only sprite was the brand in the category that witnessed 0.1% growth in the year 2013 in United States. Apart from that, Coca Cola witnessed a decline in sales by around 0.5%.
The tastes and preferences for consumers have been changing. The people who used to drink colas between and after dinner have decreased. People are more conscious about health these days and are doing efforts to avoid obesity. Fruit juices that are more refreshing and are healthy as compared to carbonated beverages are increasing in demand. The compounded annual growth rate of fruit juices in the last 9 years is 6.6% while carbonated soft drinks have a CAGR of 5.6%. So the beverage companies have to keep in mind that in order to stay in the competition, they must include healthy drinks in their product lines so that it neutralizes the negative sales of carbonated soft drinks. This way they can keep up with the competition and should continue adapting new trends and preferences of consumers. Coca Cola stock price today as of 11th price of $38.99. KO shares has declined around 6% year to date but moving forward, analysts expect it to appreciate more than 10% in the coming 12 months.
Since 2010, the revenues have increased by only $11.6 billion which is a slow growth rate. Their net income since 2010 has declined $2.2 billion and so have Earnings by the same rate. But what are the prospects of Coke moving forward? The company has plans to diversify into other categories of beverages and focus on emerging categories so that their Revenues increase. The Stock graph of KO has showed a downward trend this year but moving forward it might improve considering the company’s agenda.
Coke price to Earnings Ratio is around 20.4 while the P/E of Pepsi is 19.35. However the Revenues of Coke are at discount to Pepsi. Coke’s most recent announced Revenues were $4.4 billion while that of Pepsi were $66 billion. However Coke and Pepsi’s Net income were $8.6 billion and $6.7 billion respectively.
Coke’s market cap is $171 billion as of now however Pepsi’s market cap is $128 billion. April is trading at $38.89 down 0.26% from last night’s closing