) revenue from each case of Coke sold internationally, which
includes concentrates and bottled beverages, has been rising slowly
over the years. The growth is driven by slight price rises as well
as an increasing contribution of bottling investments to
Coca-Cola's overall revenues. Coca-Cola mainly competes
with PepsiCo (
), Dr Pepper Snapple (
), and National Beverage (
) in the CSD market globally.
Coca-Cola is also benefiting from greater sales volumes from key
emerging markets like India and China. We believe integrating the
bottlers business into its own business and leveraging its
strong brand image in carbonated soft drink (
) market, Coca-Cola will be able to increase its revenues from
national and international operations.
While we expect Coca-Cola's average revenue from per case of
coke sold internationally will increase slowly to $1.40 by the end
of Trefis forecast period, Trefis members predict a higher revenue
level of close to $2, representing an upside of 6% to KO stock.
We currently have a
Trefis price estimate of $60.54 for Coca Cola's
, about 4% below the current market price of $63.04.
Bottling Business Integration to Help Controls Costs and
Boost Revenues for Coca-Cola
Soft drinks manufacturers are realizing the importance of having
their in-house bottling business. Coca-Cola's integration of the
North American operations of bottler Coca-Cola Enterprises is a
step in the right direction. The company expects to save at least
$350 million per year, phased in over the next four years, as
stated by Coca-Cola in its Q3 2010 earnings results.
The revenue contribution from bottling investments for Coca Cola
has increased from about 18% in 2005 to over 26% in 2009. With
increasing integration of bottlers, a higher portion of Coca Cola's
sales volume will include bottled beverages that have a much higher
selling price compared to concentrates. We expect this to sustain
growth in revenue per case for Coke as well as other Coca Cola
brands. One case of coke is equivalent to 192 oz volume of finished
Leveraging Brand Image, Market Leader Position
Coca Cola is the global market leader and its flagship brand is
the highest selling CSD brand internationally, with close to 21%
volume market share. A strong market position allows the company to
influence its bottling partners, and Coca Cola can leverage its
position to drive slight rises in concentrate prices in the
Coca-Cola can also leverage its brand image to bolster sales
internationally, which contributes around three-fourth of its total
revenues. Out of its international markets, the company is focusing
mainly on countries like India, Brazil and China which are
witnessing high sales growth.
Trefis Community Forecast
Trefis members forecast Coca Cola's international revenue per
case will increase from $1.50 in 2011 to $1.90 by the
end of the Trefis forecast period, compared to the baseline Trefis
estimate of an increase from $1.30 to $1.40 during the
same period. The member estimates imply an upside of 6% to the
Trefis price estimate for Coca Cola's stock.
complete analysis for Coca Cola's stock is
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