Have you lived your entire life in the wilderness Henry David Thoreau style with no connection to the outside world?
If the answer to that question is ‘no’, then you are familiar with The Coca-Cola Co (NYSE:KO).
Coca-Cola is the global leader of the beverage industry.
The constant criticism on Coca-Cola stocks is that sodas are unhealthy and people are slowly switching away from them.
There’s a small bit of truth to that – but even if Coca-Cola only sold sodas, then it would be in about the same position as the cigarette industry. That’s not a terrible place to be… Altria Group Inc (NYSE:MO) – the U.S. cigarette industry leader and owner of Marlboro – has seen its stock price rise about 27% over the last 12 months, while the S&P 500 is flat over the same time period.
But the truth of the matter is that Coca-Cola is much, much more than a soda company. Coca-Cola has 20 billion dollar brands. Of these 20 brands, 14 are non-carbonated.
The growth story surrounding Coca-Cola is surprisingly simple. If people continue to drink beverages, Coca-Cola will continue to grow its earnings. That’s about as safe an investment as can be made.
Fortunately for Coca-Cola, more and more in the world are able to afford buying the company’s expensive (relative to tap water) beverages.
Over the next 5 years, the global middle class is expected to increase by 700 million. Personal consumption growth is expected to increase 20 trillion. The image below highlights this growth: