Recently, world's largest global producer and marketer of
The Coco-Cola Company
) entered into a multi-year partnership with leading multichannel
) that includes the interwining of Coca-Cola brand into HSN's
events throughout the year including festive occasions.
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According to the agreement, Coco-Cola products will be endorsed
through all HSN programs and will be available to consumers
through its multiple digital platforms like cable channels,
online, mobile applications and other social media.
In addition, the companies have agreed that HSN products will be
available at Coca-Cola's online store and My Coke Rewards stores.
The companies will also conduct a HSN cares campaign with Diet
Coke in support of The Heart Truth in February 2013.
The nonalcoholic beverage segment is highly competitive and in
order to gain its share of business, the Coco-Cola company needs
to focus on promotional activities. Coca-Cola's advertising
spending as a percentage of sales has decreased since 2006 and
the company has not been involved in adequate brand building.
This has affected company sales and has provided opportunities to
) to grow in the North American beverage segment. The present
acquisition will ensure brand building for the company and will
help it to reach out to a larger consumer base.
On the other hand, HSN Inc. is one of the leading multichannel
retailers with large consumer base. The partnership will enable
the company enjoy the benefits of the strong brand power of
We are encouraged by The Coca-Cola Company's global reach, strong
brand power, expanding presence outside the U.S. and its solid
cash position. Moreover, the company's strategy of growing
through acquisitions and its productivity initiatives are
expected to result in significant cost savings and improved
productivity in the near future. However, soft economic
conditions and a tough currency environment ahead concern us.
Currently, we have a Neutral recommendation on The Coca-Cola
Company over the long term. The Coca-Cola Company carries a Zacks
#3 Rank in the near term (Hold rating).