) is the world's largest manufacturer, distributor, and marketer of
non-alcoholic beverage concentrates/syrups and competes with
) and Dr. Pepper Snapple Group (
). The company sells their syrups and concentrates to bottlers who,
in turn, sell the finished product.
The Coke brand had roughly 17% market share in the U.S. in 2009,
much higher than its primary competitor Pepsi, which had less than
11% market share.
Coke relies heavily on its trademark Coke soft drink, which
accounts for nearly 27% of our
price estimate for Coke's stock. The company's Diet Coke brand
accounts for an additional 17%. On the other hand, Pepsi
relies more on its Frito Lay snack brand (42% of stock
value), as its trademark Pepsi brand accounts for only 7% of
our $67.28 price estimate for Pepsi's stock.
Coca-Cola Bottler Merger in Mexico
Last week, Mexico's 2
largest Coca-Cola producers announced a merger that would create
the second largest bottler in Latin America and save the companies
an estimated $80 million a year through cost synergies within three
years. The resulting company would have a strong presence in
Mexico, which is by far the world's largest per capita consumer of
Some reports have speculated that there may be further
consolidation among bottlers in Latin America. The reports have
noted that there are around 40 Coke bottlers in Mexico, Brazil and
Argentina, presenting an opportunity for consolidation.
See our full analysis and $60.54 price estimate
Carbonated Soft Drink Market Share Outlook
Coca-Cola's net operating revenues from Latin America increased
at an annual growth rate of around 10% between 2007 and 2009, and
now constitute around 12% of the company's net revenues. This has
largely been driven by increasing market share (volume sales
growth) in the region. Unit case volume of soft drinks sold
annually by Coca-Cola bottlers in Latin America increased by 8% in
2008 and 6% in 2009.
Growth in the Latin American market has helped Coca-Cola to
achieve slight improvement in its international carbonated soft
drinks market share. The market share increased from around 20.6%
in 2005 to 21.4% in 2009. Going forward, we expect it to increase
to around 22% by the end of our forecast period.