The Coca-Cola Company
) reached a 52-week high of $42.48 on Tuesday, Apr 16, 2013 on
announcement of expanded distribution deals with five of its
bottling companies. The closing price of the cola giant on Apr 16
Share Price Drivers
In concurrence with its first quarter earnings release,
Coca-Cola announced that it was granting new expanded U.S.
territories to five of its bottling companies to distribute its
beverages, under its new beverage partnership model. The five
bottling companies include
Coca-Cola Bottling Co. Consolidated
), Coca-Cola Bottling Company United Inc., Swire Coca-Cola USA,
Coca-Cola Bottling Company High Country and Corinth Coca-Cola
Bottling Works Inc.
The new agreement with the bottlers is expected to improve the
efficiency of the operating territories and overall profits in
the U.S. by shifting to a more franchise based model. The
addition of new territories will add some of the important and
largest cities to the existing territories of the bottling
partners. The present transaction is expected to close during
The company's North American beverage business is seeing
sluggish volumes of its sparkling beverages like Coke and Fanta
for quite sometime. Changing consumer preferences, increasing
health consciousness and rising obesity concerns are affecting
demand of the carbonated beverages of Coca-Cola as well as other
soft drink companies like
Dr Pepper Snapple Group Inc.
KO 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
The company also announced mixed first quarter results on the
same day. Coca-Cola's first quarter 2013 earnings of 46 cents per
share beat the Zacks Consensus Estimate of 45 cents by a penny.
Moreover, earnings grew 5% from the prior-year quarter as revenue
decline was offset by significantly improved margins. Revenues
declined 1% to $11.04 billion as benefit from volume growth was
largely offset by currency headwinds, structural changes and two
fewer selling days in the quarter.
Coca-Cola carries a Zacks Rank #3 (Hold).
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