The Coca-Cola Company (KO)’s Branding Brilliance

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The Coca-Cola Company (NYSE:KO) should deliver long-term gains for investors, but is it the best option in its peer group? Its archrival, PepsiCo, Inc. (NYSE:PEP), always poses a significant threat. And in the energy drink market, Coca-Cola is chasing Monster Beverage Corp (NASDAQ:MNST). Let’s take a look at how this is all likely to play out in the coming years.

The Coca-Cola Company (NYSE:KO)

The Coke brand

The two most recognizable words in the world are “OK” and “Coca-Cola.” It doesn’t get any better than that for global branding. Coca-Cola products are currently sold in more than 200 countries. China and India have the most potential for Coca-Cola, since their massive populations are eager to consume American brands. The Chinese consumer might not be as strong as advertised, but the Indian consumer is very strong — The Coca-Cola Company (NYSE:KO) saw double-digit volume growth in India in 2012.

Coca-Cola has already boosted marketing efforts in Brazil, prior to the 2014 World Cup and 2016 Summer Olympics. These events should lead to increased brand recognition and strong growth throughout Latin America.

Industry trends

With the American consumer growing more health-conscious, sparkling beverage sales have declined. Ironically, energy drinks have increased in popularity. But is this really ironic? Energy drinks get a bad rap. While no one knows all the effects yet, energy drinks are often have similar sugar amounts to soda as well as caffeine amounts to coffee.

For example, a 16-ounce Monster Energy drink contains 56 grams of sugar, and a 20-ounce The Coca-Cola Company (NYSE:KO) contains 65 grams of sugar. Also, A 16-ounce Monster Energy drink has 165 milligrams of caffeine, and a 16-ounce Starbucks Grande coffee has 330 milligrams of caffeine.

The Coca-Cola Company (NYSE:KO) has made its move in the energy drink market with NOS and Full Throttle, but these energy drinks haven’t been able to capture much market share versus Red Bull and Monster Beverage Corp (NASDAQ:MNST). Then again, this shouldn’t concern investors. Coca-Cola simply wants a piece of the pie. Plus, the industry might suffer in the near future as the American Medical Association is now supporting a ban on marketing energy drinks to minors.

The Coca-Cola Company (NYSE:KO) also offers healthy options, such as bottled water, Simply Orange, and Honest Tea. All have good potential thanks to increasingly health-conscious consumers:

  • Industrywide bottled water sales have increased 6.7% year over year, with strong demand in the United States, China, Mexico, Brazil, and Indonesia.
  • Coca-Cola’s annual revenue for juice drinks averages approximately $13 billion.
  • Coca-Cola acquired 40% of Honest Tea in 2008, and its sales have increased fourfold since that time. (Coca-Cola acquired the rest of the company in 2011.)
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