In the past couple of years, The Coca-Cola Company KO has been making investments in growing companies and the beverage industry. These investments in newer revenue platforms are expected to boost Coca-Cola’s long-term sales and profits by diversifying beyond its carbonated beverages which are experiencing a declining demand due to their high calorie content.
On Wednesday, Coca-Cola and its largest Latin American bottler Coca-Cola Femsa SAB KOF announced that they have reached an agreement with consumer products giant Unilever Plc UL to buy the AdeS soy-based beverage business of the latter for about $575 million.
AdeS, a mix of fruit juice and soy, is a leading soy-based beverage brand in Latin America. It has a presence in Brazil, Mexico, Argentina, Uruguay, Paraguay, Bolivia, Chile and Colombia. With this deal, Coca-Cola will debut into the soy-based beverage category.
In Feb 2014, Coca-Cola entered into an innovative partnership with Keurig Green Mountain under which the latter will make and sell Coca-Cola branded single-serve pods for use on its Keurig Cold at-home beverage system. The deal opens up an exciting new packaging format for Coca-Cola’s brands. It also holds a 17% stake in Monster Beverage Corporation MNST and signed a deal with the latter in Jun 2015 to expand distribution of Monster products into additional territories.
This will allow Coca-Cola to compete more effectively in the global energy drink category. Coca-Cola has also signed a distribution agreement with Suja, a high growth organic cold-pressed juice company to gain a foothold in this growing market. In China, the company has invested in the plant-based protein drinks market through the acquisition of the beverage business of China Green Culiangwang Beverages Holdings, now China Green (Holdings) Limited. In early 2016, Coca-Cola acquired a 40% stake in Chi Limited, Nigeria's leading value-added dairy and juice producing company.
All these investments in nutritious and healthier products expands Coca-Cola’s still beverages portfolio amid rising health consciousness among Americans.
Coca-Cola has a Zacks Rank #3 (Hold).
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