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How to Confuse an Investor
Few companies that exist today or have existed in the past have held such a strong competitive advantage in its respective field asThe Coca-Cola Company. Created in 1886 by a pharmacist, Coca-Cola has, over the past 134 years, buried itself into the mind of billions of consumers around the world as being the perfect beverage to bring an element of happiness into their lives.
It’s little surprise then that over 1.9 billion servings of Coca-Cola products are consumed globally every single day.
Such a strong competitive advantage would naturally attract anyserious investor, but when looking for more information about the company it’ll be easy to become confused, due to a unique peculiarity of The Coca-Cola Company’s business model.
Just look at IBIS World’smost recent reporton the Soda Production industry and you will see that there is almost no mention of The Coca-Cola Company, but still entire sections given to Pepsi and Keurig Dr. Pepper. The reason for this is that The Coca-Cola Company doesn’t actually produce very much soda.
The actual production of Coca-Cola’s beloved brands is done by independent partners and distributors; commonly known as “bottlers”. To make things more confusing for anyone hoping to invest in Coca-Cola is that the bottlers have nearly the exact same name.
While you won’t see The Coca-Cola Company listed in the Soda Production report next to Pepsi and Dr. Pepper, what you will see listed isCoca-Cola Bottling Co. Consolidated, the largest independent bottler of Coca-Cola within the United States. The similar names are deceiving but the two are completely different companies, each listed separately on the New York Stock Exchange.
For clarification, here are the companies with the appropriate stock tickers:
- Coca-Cola Company(KO): Parent Company
- Coca-Cola Consolidated(co*kE): Bottling Company
The Bottling Business
So, why does Coca-Cola have such a strange business model? Is it just to confuse us investors?
Dating all the way back to the early 1900s, the makers of Coca-Cola realized they could improve not only their productivity and efficiency, but also their profitability by having other companies do the manufacturing and distribution of their product. All co*ke had to do is simply supply the raw material and allow the companies to use the Coca-Cola brand name; showing the immense power of brand recognition.
This business model grew more ingrained into the foundation of The Coca-Cola Company as their brand grew stronger worldwide. Demand for the red can, white lettering, and dark fizzing liquid inside, grew year after year in almost every country on earth. By 2020, the Coca-Cola network had 225 bottling partners in more than 200 countries; no surprise given that almost 85% of Coca-Cola’s sales come from outside the U.S.
The arrangement between The Coca-Cola Company and its bottlers is set out in contracts. Each one states which Coca-Cola products the bottler is able to sell, in what region they are allowed to sell, as well as dozens of other variables laid out to make the distribution of Coca-Cola products as streamlined as possible.
Coca-Cola Bottling Co. Consolidated for example, is authorized to sell 38 Coca-Cola products in 14 states and the District of Columbia. Coca-Cola Bottling also sells almost a dozen beverages outside of the Coca-Cola lineup including Dr. Pepper, Dunkin’ Donuts Coffee, and Monster Energy drinks.
Still, over 85% of the bottling company’s total sales were from Coca-Cola beverages, but even as the largest independent bottler in the United States, Coca-Cola Bottling still only brings in 12% of the revenue that The Coca-Cola Company brings in.
While The Coca-Cola Company offers funds for marketing efforts and other expenses, it largely leaves the bottlers to their own management. Each one gains its own retail customers within its given region and markets extensively to try and gain brand recognition. Incidentally, the vast majority of semi trucks and delivery vans plastered with the Coca-Cola logo are not actually owned by The Coca-Cola Company, but are instead owned by local bottlers.
The sales of almost all the bottling companies in the U.S. are highly concentrated in just a few large retailers. In 2019, Walmart represented 19% of Coca-Cola Bottling Co. Consolidated’s sales, with Kroger representing 12%.
The Worse End of the Deal
The bottlers undoubtedly have the worse end of the deal, as they have to purchase and maintain the manufacturing and distribution equipment while also having to pay The Coca-Cola Company a vast portion of its income.
In 2019, Coca-Cola Bottling Co. Consolidated brought in $4.8 billion in revenue, with $1.3 billion of that going to The Coca-Cola Company for concentrate and syrup, consumer marketing programs, as well as drink equipment. While this arrangement is not inherently bad, it just makes profitability a more laborious task for the bottling company.
See the difference between the two’s profitability for yourself:
co*kE’s Profitability
Source:Stock Rover
KO’s Profitability
Source:Stock Rover
As you can see, KO’s profitability is higher in almost every regard, but the margins especially stand out. KO maintains a very robust 24% net profit margin, while co*kE only operates at around 2%. Additionally, KO’s ROE ismore than doubleco*kE’s ROE.
Nevertheless, the Coca-Cola bottlers continue this arrangement with The Coca-Cola Company given that they have virtually no other option. Given how strong consumer brands are within the beverage and food markets, the bottlers would have no success in trying to develop their own soft drink line, even if they did have all the ingredients, manufacturing equipment, and distribution channels.
Although the bottlers may not have the most lucrative business, the Coca-Cola network shows the genius of the Coca-Cola management, which realized early on that the value of their product was not in the production, distribution, or even the taste. The business recognized it’s owneconomic moat: the value of a worldwide brand.
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FAQs
The Coca-Cola Co (KO) is the company that owned Coca-Cola brands and its ingredients. They the one who make and create marketing strategies for ATL, BTL campaigns, whilst Coca-Cola Bottling is the company that manufacture and distribute the products and manage all the executions end to end.
Does KO own co*kE? ›
The Coca-Cola Company (NYSE: KO) is a total beverage company with products sold in more than 200 countries and territories. Our company's purpose is to refresh the world and make a difference. Our portfolio of brands includes Coca-Cola, Sprite, Fanta and other sparkling soft drinks.
What's the difference between KO and KOF? ›
KO gives you direct ownership of The Coca-Cola Company, while KOF gives you a stake in its largest bottler.
What does KO stand for Coca-Cola? ›
KO stands for Coca-Cola Company (stock symbol)
This definition appears very frequently and is found in the following Acronym Finder categories: Business, finance, etc.
How high will KO stock go? ›
Coca-Cola Co (NYSE:KO)
The 21 analysts offering 12-month price forecasts for Coca-Cola Co have a median target of 68.00, with a high estimate of 77.00 and a low estimate of 62.00. The median estimate represents a +13.64% increase from the last price of 59.84.
Is KO good for dividends? ›
Yes, KO has paid a dividend within the past 12 months. How much is Coca-Cola's dividend? KO pays a dividend of $0.44 per share. KO's annual dividend yield is 2.94%.
Who owns the most KO stock? ›
Does buffet own Ko or co*ke? ›
Berkshire Hathaway's Coca-Cola Stake
Warren Buffett acquired 400 Million Coca-Cola shares worth $24 Billion. That's 7.26% of their entire equity portfolio (5th largest holding). The investor owns 9.32% of the outstanding Coca-Cola stock. The first Coca-Cola trade was made in Q4 1998.
Who owns the most shares of KO? ›
The Coca-Cola Company is a publicly listed company, meaning there is not one sole owner, but rather the company is 'owned' by thousands of shareholders and investors around the world. However, the largest shareowner of the company is American businessman Warren Buffett.
Is a KO better then a TKO? ›
A TKO is considered to be stronger than a KO. This is because, with a KO, the opponent cannot continue, but with a TKO, the opponent has been beaten to a point he/ she cannot fight anymore.
A knockout (abbreviated to KO or K.O.) is a fight-ending, winning criterion in several full-contact combat sports, such as boxing, kickboxing, muay thai, mixed martial arts, karate, some forms of taekwondo and other sports involving striking, as well as fighting-based video games.
What does KO stand for in fighting? ›
What is a knockout? A knockout is when a boxer falls to the canvas and the referee then counts to ten in order to give the fighter the chance to get back to his feet and restart the bout.
What KO means? ›
transitive verb. : to knock out (as in boxing)
What is KO slang? ›
a slang term for knock out. See knockout. nounWord forms: plural KO's or k.o.'s. a slang term for knockout.
What does KO stand for? ›
a knockout in boxing. verb (used with object), KO'd, KO'ing. to knock unconscious, especially in a boxing match; knock out.
What will KO be worth in 5 years? ›
Coca-Cola Co quote is equal to 59.835 USD at 2023-02-25. Based on our forecasts, a long-term increase is expected, the "KO" stock price prognosis for 2028-02-16 is 88.055 USD. With a 5-year investment, the revenue is expected to be around +47.16%. Your current $100 investment may be up to $147.16 in 2028.
Is KO a monthly dividend? ›
Does Coca-Cola Pay Monthly Dividends? Coca-Cola does NOT pay a monthly dividend.
What is a good price for KO? ›
Stock Price Target KO
| High | $77.00 |
|---|
| Median | $68.00 |
| Low | $62.00 |
| Average | $68.57 |
| Current Price | $60.16 |
Turning to Wall Street, KO stock has a Strong Buy consensus rating based on four Buys, one Hold, and zero Sell ratings. The average KO stock price target is $66.40, implying 9.8% upside potential.
Is KO a buy sell or hold? ›
Coca-Cola has received a consensus rating of Buy. The company's average rating score is 2.67, and is based on 12 buy ratings, 6 hold ratings, and no sell ratings.
Historical dividend payout and yield for CocaCola (KO) since 1964. The current TTM dividend payout for CocaCola (KO) as of February 17, 2023 is $1.76. The current dividend yield for CocaCola as of February 17, 2023 is 2.93%.
How many times has KO stock split? ›
Stock Info
The table below provides details of each of the eleven stock splits conducted in the history of The Coca-Cola Company, including the cumulative number of shares that would be held if one share of stock was purchased when the stock began trading in 1919.
When was the last time ko stock split? ›
The most recent stock split occured on August 13th, 2012. One KO share bought prior to June 1st, 1977 would equal to 96 KO shares today.
When was KO last stock split? ›
KO's third split took place on May 14, 1990. This was a 2 for 1 split, meaning for each share of KO owned pre-split, the shareholder now owned 2 shares.
...
| KO Split History Table |
|---|
| Date | Ratio |
|---|
| 05/13/1996 | 2 for 1 |
| 08/13/2012 | 2 for 1 |
| 02/19/1965 | 2 for 1 |
6 more rowsStrangely, Dr Pepper is only owned by Coca Cola in its European and South Korean markets. Everywhere else it is sold is managed by the Keurig Dr Pepper company. This company also owns the well known soft drink 7up.
How much does co*ke CEO get paid? ›
In 2021, the salary for Coca-Cola CEO James Quincy was $24.6 million. This includes his cash compensation which is his base pay of $1.6 million, and a $6.4 million bonus.
Who owns KO juice? ›
“There's so much you can do with sugarcane,” says Kevin Nguyen, owner and operator of Ko Kane Sugarcane Juice Bar.
How many years has KO raised its dividend? ›
62 years of consecutive dividend increase.
Who owns half of co*ke Cola? ›
Thousands of people. The Coca‑Cola Company is a public company that trades its shares on the New York stock exchange - so we are 'owned' by our thousands of shareholders and investors around the world.
Does Ko own monster? ›
In June 2015, The Coca-Cola Company took ownership of Hansen's juice products and sodas, Hubert's Lemonade, Blue Sky sodas, Peace Tea and other non-energy drink brands, in exchange for their energy drink brands. The Coca-Cola Company bought a 16.7% stake for $2.15 billion in Monster Beverage Corp in 2015.
Many expected a competitive fight as Geier sported a 20-0 record heading into the contest. However, Jimenez only needed 17 seconds to put Geier away. The victory against Geier earned Jimenez a spot in the Guinness Book of Records as it was the fastest knockout ever in a professional championship boxing fight.
Why do boxers hug? ›
So, if you're new to the game, you might be wondering why do boxers hug in the match? The hug in boxing is called a clinch. It's a strategic move where you trap your opponent's arms under yours, stopping the action and causing a break.
Does a KO count as a knockdown? ›
Knockdown Betting - For settlement purposes a knockdown is defined as a fighter being KO'd or receiving a mandatory 8 count (anything deemed a slip by the referee will not count).
What happens when you are KO? ›
When someone is hit hard enough to render them unconscious, the brain can experience permanent damage as it rattles inside the skull. “That twisting and pulling can cause brain circuits to break, or lose their insulation, or get kinked up, and that shuts off parts of the brain,” he said.
What causes a KO? ›
Retrospective analysis of boxing knockouts has revealed that they typically are caused by a hook to the side of the jaw which causes a rotation of the head in the horizontal plane. Uppercuts to the chin may also cause unconsciousness, while straight punches to the face are unlikely to do so (6).
Does a KO end the fight? ›
As stated, a knockout (often abbreviated to KO or K.O.) is a fight-ending, winning criterion in several full-contact combat sports and happens after any legal strike or a combination thereof that renders an opponent unable to continue fighting, usually due to loss of consciousness.
How long does a knockout last? ›
In most cases, a knockout lasts less than 10 seconds, after which the person regains consciousness. However, a bad knockout can last longer than a minute and even several minutes. The length of the knockout depends on the severity of the concussion and whether or not the brainstem was damaged.
How does it feel to get knocked out? ›
What does being knocked out feel like? The short answer is that it doesn't feel like anything. If you have ever been knocked out or just hit really hard then you know despite how painful it looks, the person receiving the hit won't feel anything and probably won't even remember the strike that knocked them out.
Where did KO come from? ›
K.O (rapper)
| K.O |
|---|
| Birth name | Ntokozo Mdluli |
| Also known as | Skhanda Gawd K:Hova Mr. Cashtime |
| Born | 13 October 1980 Piet Retief, Mpumalanga, South Africa |
| Origin | Soweto, Johannesburg, South Africa |
5 more rowsKO stands for Failure and OK stands for Success.
Noun. soko (plural sokos) (dated) A species of African ape, supposedly a variety of the chimpanzee. quotations ▼
What language uses KO? ›
To re-sort the list, click a column heading.
...
Language studies.
myco- a combining form meaning “mushroom, fungus”: mycology. is now available in paperback and eBook formats. Make it yours today!
Does Berkshire Hathaway own KO or co*ke? ›
Berkshire Hathaway's Coca-Cola Stake
That's 7.27% of their entire equity portfolio (5th largest holding). The investor owns 9.31% of the outstanding Coca-Cola stock. The first Coca-Cola trade was made in Q4 1998. Since then Warren Buffett bought shares ten more times and sold shares on eight occasions.
Does buffet own KO or co*ke? ›
His Berkshire Hathaway conglomerate owns 400 million shares of Coca-Cola — a roughly 9% stake worth around $25 billion.
Is KO a good stock? ›
The financial health and growth prospects of KO, demonstrate its potential to perform inline with the market. It currently has a Growth Score of C. Recent price changes and earnings estimate revisions indicate this would be a good stock for momentum investors with a Momentum Score of A.
How much does KO pay per share? ›
KO pays a dividend of $1.76 per share. KO's annual dividend yield is 2.9%. Coca Cola's dividend is higher than the US industry average of 2.37%, and it is lower than the US market average of 3.77%. What is Coca Cola's Ex-Dividend Date?
Which stock has the highest dividend? ›
Most Recent Earnings of Dividend Stocks
- T. AT&T. Jan 25, 2023. ...
- XRX. Xerox. Jan 26, 2023. ...
- IBM. International Business Machines. Jan 25, 2023. ...
- CVX. Chevron. Jan 27, 2023. ...
- EOG. EOG Resources. Feb 23, 2023. ...
- ET. Energy Transfer. Feb 15, 2023. ...
- HESM. Hess Midstream Partners. Jan 25, 2023. 2022 (Q4) ...
- ARCC. Ares Capital. Feb 07, 2023. 2022 (Q4)
Warren Buffett's Berkshire Hathaway made a significant investment in shares of beverage giant Coca-Cola in 1988, when the stock's price was depressed following a market crash. Buffett and others at Berkshire recognized Coca-Cola's market advantages, believing that the company was poised to recover.
Coca-Cola Co quote is equal to 60.090 USD at 2023-02-24. Based on our forecasts, a long-term increase is expected, the "KO" stock price prognosis for 2028-02-16 is 88.055 USD. With a 5-year investment, the revenue is expected to be around +46.54%. Your current $100 investment may be up to $146.54 in 2028.
Is KO a strong buy? ›
Turning to Wall Street, KO stock has a Strong Buy consensus rating based on four Buys, one Hold, and zero Sell ratings. The average KO stock price target is $66.40, implying 9.8% upside potential.
How much dividend does co*ke pay a year? ›
Historical dividend payout and yield for CocaCola (KO) since 1964. The current TTM dividend payout for CocaCola (KO) as of February 22, 2023 is $1.76. The current dividend yield for CocaCola as of February 22, 2023 is 2.94%.
How many times a year does KO pay dividends? ›
There are typically 4 dividends per year (excluding specials), and the dividend cover is approximately 1.9.
How many times does KO pay dividends? ›
The Company normally pays dividends four times a year, usually April 1, July 1, October 1 and December 15. Shareowners of record can elect to receive their dividend payments electronically or by check in the currency of their choice.
