Abstract This research considers The Coca-Cola Company from an ...
Abstract This research considers The Coca-Cola Company from an ...
Abstract This research considers The Coca-Cola Company from an ...
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<strong>Abstract</strong><br />
<strong>Coca</strong>-<strong>Cola</strong> 1<br />
<strong>This</strong> <strong>research</strong> <strong>considers</strong> <strong>The</strong> <strong>Coca</strong>-<strong>Cola</strong> <strong>Comp<strong>an</strong>y</strong> <strong>from</strong> <strong>an</strong> investment perspective, including<br />
evaluating key ratios of the comp<strong>an</strong>y's fin<strong>an</strong>cial perform<strong>an</strong>ce <strong>an</strong>d its recent stock perform<strong>an</strong>ce to<br />
consider which types of investors might find this <strong>an</strong> attractive opportunity. <strong>Coca</strong>-<strong>Cola</strong> is one of<br />
the most famous br<strong>an</strong>ds in the world, with a familiar red <strong>an</strong>d white color scheme that is well<br />
recognized. Unlike some other powerful Americ<strong>an</strong> br<strong>an</strong>ds such as Chrysler or IBM that have<br />
looked to international mergers or sell-offs in order to survive, <strong>Coca</strong>-<strong>Cola</strong> has remained <strong>an</strong><br />
Americ<strong>an</strong> comp<strong>an</strong>y even as it has exp<strong>an</strong>ded around the globe.
<strong>The</strong> <strong>Coca</strong>-<strong>Cola</strong> <strong>Comp<strong>an</strong>y</strong><br />
<strong>Coca</strong>-<strong>Cola</strong> 2<br />
In one year, <strong>Coca</strong>-<strong>Cola</strong> will be celebrating its 125 th <strong>an</strong>niversary, <strong>an</strong>d as a br<strong>an</strong>d, there is a<br />
lot to celebrate. <strong>Coca</strong>-<strong>Cola</strong> was invented in Atl<strong>an</strong>ta, Ga. in 1886 as a combination of local<br />
pharmacist Dr. John Stith Pemberton’s unique syrup <strong>an</strong>d carbonated water. <strong>The</strong> product was first<br />
sold at Jacob’s Pharmacy as a soda fountain drink for five cents per glass. <strong>The</strong> <strong>Coca</strong>-<strong>Cola</strong> logo<br />
was invented by Dr. Pemberton’s partner Fr<strong>an</strong>k Robinson, who drew it himself (“<strong>Coca</strong>-<strong>Cola</strong>,”<br />
2009). One of the reasons that <strong>Coca</strong>-<strong>Cola</strong> continues to be successful is its aggressive br<strong>an</strong>d<br />
m<strong>an</strong>agement. <strong>The</strong> comp<strong>an</strong>y has been <strong>an</strong> active sponsor of the Olympics since the 1984 games,<br />
which includes being on key committees <strong>an</strong>d involved in key partnerships that org<strong>an</strong>ize the<br />
games. Other sports activities are also sponsored by the comp<strong>an</strong>y, which provides global <strong>an</strong>d<br />
frequent opportunities to promote the br<strong>an</strong>d (Wedekind, 2008).<br />
<strong>The</strong> <strong>Coca</strong>-<strong>Cola</strong> <strong>Comp<strong>an</strong>y</strong> operates in more th<strong>an</strong> 200 countries <strong>an</strong>d markets more th<strong>an</strong> 500<br />
br<strong>an</strong>ds <strong>an</strong>d 3,300 beverage products. <strong>The</strong>se products include sparkling beverages <strong>an</strong>d still<br />
beverages such as waters, juices <strong>an</strong>d juice drinks, teas, coffees, sports drinks <strong>an</strong>d energy drinks.<br />
<strong>The</strong> <strong>Comp<strong>an</strong>y</strong> has four of the world’s top five nonalcoholic sparkling beverage br<strong>an</strong>ds: <strong>Coca</strong>-<br />
<strong>Cola</strong>, Diet Coke, Sprite <strong>an</strong>d F<strong>an</strong>ta (2009 Annual Review).<br />
<strong>The</strong> <strong>Coca</strong>-<strong>Cola</strong> System<br />
<strong>The</strong> <strong>Coca</strong>-<strong>Cola</strong> <strong>Comp<strong>an</strong>y</strong> is a global business that operates on a local scale in every<br />
community where they do business. Coke created global reach with local focus because of the<br />
strength of the <strong>Coca</strong>-<strong>Cola</strong> system, which comprises of the <strong>Comp<strong>an</strong>y</strong> <strong>an</strong>d the bottling partners,<br />
more th<strong>an</strong> 300 worldwide. <strong>The</strong> <strong>Comp<strong>an</strong>y</strong> m<strong>an</strong>ufactures <strong>an</strong>d sells concentrates, beverage bases<br />
<strong>an</strong>d syrups to bottling operations; owns the br<strong>an</strong>ds; <strong>an</strong>d is responsible for consumer br<strong>an</strong>d<br />
marketing initiatives. <strong>The</strong> bottling partners m<strong>an</strong>ufacture, package, merch<strong>an</strong>dise <strong>an</strong>d distribute the
<strong>Coca</strong>-<strong>Cola</strong> 3<br />
finished br<strong>an</strong>ded beverages to Coke’s customers <strong>an</strong>d vending partners, who then sell the products<br />
to consumers (2009 Annual Review).<br />
All bottling partners work closely with customers; grocery stores, restaur<strong>an</strong>ts, street<br />
vendors, convenience stores, movie theaters <strong>an</strong>d amusement parks, among m<strong>an</strong>y others; to<br />
execute localized strategies developed in partnership with the <strong>Comp<strong>an</strong>y</strong>. Customers then sell the<br />
products to consumers at a rate of 1.6 billion servings a day. <strong>The</strong> business operations are divided<br />
into the following geographies: Eurasia <strong>an</strong>d Africa, Europe, Latin America, North America <strong>an</strong>d<br />
Pacific, as well as the Bottling Investments Group (2009 Annual Review).<br />
Over the next decade, <strong>The</strong> <strong>Coca</strong>-<strong>Cola</strong> <strong>Comp<strong>an</strong>y</strong> m<strong>an</strong>agement see a world of<br />
extraordinary growth unfolding in the beverage industry, <strong>an</strong>d pl<strong>an</strong> to capture as much of that<br />
growth as they c<strong>an</strong> by 2020 <strong>an</strong>d beyond. Coke m<strong>an</strong>agement believes that the <strong>Comp<strong>an</strong>y</strong> <strong>an</strong>d their<br />
global bottling partners (the <strong>Coca</strong>-<strong>Cola</strong> system) are uniquely positioned to lead in this growing<br />
world of refreshment through portfolio of br<strong>an</strong>ds, innovation, integrated marketing capabilities<br />
<strong>an</strong>d unmatched product availability. Coke m<strong>an</strong>agement also believes that keeping connected with<br />
consumers <strong>an</strong>d knowing what they w<strong>an</strong>t to drink <strong>an</strong>d how they w<strong>an</strong>t to interact with the <strong>Coca</strong>-<br />
<strong>Cola</strong> br<strong>an</strong>ds will help the comp<strong>an</strong>y grow. By working toward each goal of the 2020 Vision, Coke<br />
is preparing for tomorrow’s market today (2009 Annual Review).
Review of Literature<br />
<strong>Coca</strong>-<strong>Cola</strong> 4<br />
<strong>The</strong> <strong>Coca</strong>-<strong>Cola</strong> <strong>Comp<strong>an</strong>y</strong> continued to grow during the worst economic environment<br />
since World War II. Coke’s intense focus on growing their br<strong>an</strong>ds, gaining share, driving<br />
revenue growth <strong>an</strong>d leveraging productivity enabled the <strong>Comp<strong>an</strong>y</strong> to meet their 2009 volume<br />
<strong>an</strong>d profit growth goals, in line with long-term targets (2009 Annual 10-K Filing, 2010).<br />
Coke entered 2009 with a simple <strong>an</strong>d clear purpose: to confront the global economic<br />
uncertainty by focusing on what they could control. Coke worked to ensure that they would<br />
come out of this crisis in <strong>an</strong> even stronger position by communicating with their consumers <strong>an</strong>d<br />
retail customers; investing in innovation; <strong>an</strong>d enh<strong>an</strong>cing their distribution, sales <strong>an</strong>d production<br />
capabilities around the world (2009 Annual 10-K Filing, 2010).<br />
Coke worked with their more th<strong>an</strong> 300 bottling partners, <strong>an</strong>d added approximately 650<br />
million incremental unit cases of volume to their business, a 3 percent gain over 2008. <strong>The</strong> 2009<br />
incremental unit case volume <strong>from</strong> China, India, Mexico <strong>an</strong>d Brazil alone was equal to adding<br />
<strong>an</strong>other Germ<strong>an</strong>y, Coke’s sixth-largest market. <strong>The</strong> <strong>Comp<strong>an</strong>y</strong> also grew individual br<strong>an</strong>ds,<br />
including Coke’s Simply ®<br />
trademark which reached retail sales of more th<strong>an</strong> $1 billion (2009<br />
Annual 10-K Filing, 2010).<br />
In 2009, the <strong>Comp<strong>an</strong>y</strong> generated $8.2 billion in cash <strong>from</strong> operations, up 8 percent <strong>from</strong><br />
2008 <strong>an</strong>d marking the first time Coke has surpassed the $8 billion mark. Coke reinvested $2<br />
billion back into the business, repurchased $1.5 billion in <strong>Comp<strong>an</strong>y</strong> stock <strong>an</strong>d paid $3.8 billion to<br />
shareowners through dividends. Indeed, 2009 marked the 47th consecutive year of increased<br />
dividend payments (2009 Annual 10-K Filing, 2010).<br />
Throughout the year, Coke made signific<strong>an</strong>t productivity enh<strong>an</strong>cements across multiple<br />
facets of the business. <strong>The</strong> leadership efforts across the sustainability spectrum, me<strong>an</strong>while,
earned <strong>The</strong> <strong>Coca</strong>-<strong>Cola</strong> <strong>Comp<strong>an</strong>y</strong> a place on the Dow Jones Sustainability World Index.<br />
<strong>Coca</strong>-<strong>Cola</strong> 5<br />
Positioning Coke among the top 10 percent of the world’s largest 2,500 comp<strong>an</strong>ies in terms of<br />
adv<strong>an</strong>cing sustainable business practices (2009 Annual 10-K Filing, 2010).<br />
<strong>The</strong> comp<strong>an</strong>y's recent fin<strong>an</strong>cial perform<strong>an</strong>ce has been strong, with third-quarter fiscal<br />
results in 2009 showing a 22 percent gain in net profit despite a 3 percent loss in revenues. <strong>This</strong><br />
was accomp<strong>an</strong>ied by a 17 percent growth in earnings per share. <strong>The</strong> comp<strong>an</strong>y continues to<br />
emphasize its international perform<strong>an</strong>ce for sodas abroad, while in the United States, it is<br />
emphasizing healthy beverage alternatives as evidenced by its purchase of Glaceau, maker of<br />
Vitamin water <strong>an</strong>d its introduction of the Coke Zero br<strong>an</strong>d in 2008 (2009 Annual 10-K Filing,<br />
2010).<br />
Ratio Analysis<br />
<strong>Coca</strong>-<strong>Cola</strong>'s current ratio was .94:1 in 2008 <strong>an</strong>d 1.28:1 in 2009, indicating that the<br />
comp<strong>an</strong>y maintains almost the same amount in its current assets needed to cover its current<br />
liabilities. <strong>The</strong> fact that the ratio has remained steady <strong>an</strong>d even seen a 25% upturn during this<br />
two-year period is positive. <strong>The</strong> comp<strong>an</strong>y's inventory turnover, which indicates how effectively<br />
the comp<strong>an</strong>y is using its assets, increased <strong>from</strong> 14.5 in 2008 to more th<strong>an</strong> 15.5 in 2009. <strong>This</strong><br />
indicates that the comp<strong>an</strong>y is becoming slightly more efficient at m<strong>an</strong>aging its assets. <strong>The</strong><br />
comp<strong>an</strong>y's total debt to total assets percentage moved downward <strong>from</strong> 48.5 percent to 47.9<br />
percent during the 2008 to 2009 time period, possibly due to the comp<strong>an</strong>y's acquisition strategy<br />
during that time. <strong>The</strong> comp<strong>an</strong>y's profit margin increased <strong>from</strong> 18 percent in 2008 to 22 percent<br />
in 2009 (2009 Annual 10-K Filing, 2010). In general, the comp<strong>an</strong>y's fin<strong>an</strong>ces are strong, <strong>an</strong>d its<br />
recent fin<strong>an</strong>cial perform<strong>an</strong>ce with regard to net income is slightly higher.<br />
<strong>Comp<strong>an</strong>y</strong>’s Debt
<strong>Coca</strong>-<strong>Cola</strong> 6<br />
<strong>Coca</strong>-<strong>Cola</strong> has pursued a strategy that includes acquiring other comp<strong>an</strong>ies in order to<br />
exp<strong>an</strong>d its market share. <strong>This</strong> includes the acquisition of Glaceau, m<strong>an</strong>ufacturer of Vitamin<br />
water, which is part of <strong>Coca</strong>-<strong>Cola</strong>'s strategy of offering more products which do not have the<br />
negative stereotypes associated with sodas. Such acquisitions c<strong>an</strong> require the addition of debt,<br />
but <strong>Coca</strong>-<strong>Cola</strong> has seen its total liabilities decline in recent years. <strong>This</strong> indicates that the<br />
comp<strong>an</strong>y is able to move forward without incurring additional debt. <strong>This</strong> is <strong>an</strong> import<strong>an</strong>t<br />
consideration for shareholders <strong>an</strong>d potential investors as they w<strong>an</strong>t to see the comp<strong>an</strong>y grow, but<br />
are concerned that debt c<strong>an</strong> burden a comp<strong>an</strong>y to the point that it is no longer able to pursue<br />
attractive market opportunities (2009 Annual 10-K Filing, 2010). <strong>This</strong> is currently not the<br />
situation at <strong>Coca</strong>-<strong>Cola</strong>.<br />
Stock Perform<strong>an</strong>ce<br />
A comp<strong>an</strong>y's past stock perform<strong>an</strong>ce is not <strong>an</strong> absolute predictor of its future stock<br />
perform<strong>an</strong>ce as m<strong>an</strong>y factors affect stock price, with current economic conditions <strong>an</strong>d events<br />
having a signific<strong>an</strong>t effect. Nonetheless, historic perform<strong>an</strong>ce c<strong>an</strong> indicate whether a stock is<br />
particularly risky, <strong>an</strong>d historic comparisons with competitors c<strong>an</strong> be instructive in underst<strong>an</strong>ding<br />
the comp<strong>an</strong>y's investment potential. <strong>The</strong> following chart illustrates stock prices for <strong>Coca</strong>-<strong>Cola</strong><br />
<strong>an</strong>d two of its largest competitors, Pepsi <strong>an</strong>d Dr. Pepper/Snapple ("<strong>The</strong> <strong>Coca</strong>-<strong>Cola</strong> <strong>Comp<strong>an</strong>y</strong>,"<br />
2009; "Pepsico," 2009; "Dr. Pepper," 2009): *Prices are not available for Dr. Pepper for the<br />
entire five-year period because it was spun off <strong>from</strong> Cadbury.
80<br />
70<br />
60<br />
50<br />
40<br />
30<br />
20<br />
10<br />
0<br />
1/2/2004<br />
5-Year Price History, <strong>Coca</strong>-<strong>Cola</strong> (KO), Pepsi (PEP) <strong>an</strong>d Dr. Pepper / Snapple (DPS)<br />
4/2/2004<br />
7/2/2004<br />
10/2/2004<br />
1/2/2005<br />
4/2/2005<br />
7/2/2005<br />
10/2/2005<br />
1/2/2006<br />
4/2/2006<br />
7/2/2006<br />
10/2/2006<br />
Date<br />
KO DPS PEP<br />
1/2/2007<br />
4/2/2007<br />
7/2/2007<br />
10/2/2007<br />
1/2/2008<br />
4/2/2008<br />
7/2/2008<br />
10/2/2008<br />
<strong>Coca</strong>-<strong>Cola</strong> 7<br />
<strong>This</strong> chart illustrates that the industry as a whole tracks the same, but that <strong>Coca</strong>-<strong>Cola</strong> has<br />
been consistently lower valued th<strong>an</strong> Pepsi by the market in recent years, despite having<br />
approximately the same price five years ago. <strong>The</strong> chart also illustrates that the gap between the<br />
two comp<strong>an</strong>ies has narrowed signific<strong>an</strong>tly recently, suggesting that <strong>Coca</strong>-<strong>Cola</strong> might be<br />
undervalued relative to Pepsi by the market.<br />
Opening the Pipeline<br />
<strong>Coca</strong>-<strong>Cola</strong> had been criticized for keeping its eyes mainly on carbonated soft drinks for<br />
m<strong>an</strong>y years longer th<strong>an</strong> it should have, while consumers <strong>an</strong>d the competition were embracing<br />
energy drinks, sports drinks, ready-to-drink teas <strong>an</strong>d the like (<strong>The</strong>odore, 2008).<br />
During the past several years, <strong>Coca</strong>-<strong>Cola</strong> acquired <strong>an</strong>d developed a number of new<br />
br<strong>an</strong>ds to broaden its presence in additional categories. In its largest acquisition to date, it bought<br />
1/2/2009
<strong>Coca</strong>-<strong>Cola</strong> 8<br />
Glaceau’s Vitaminwater <strong>an</strong>d Smartwater br<strong>an</strong>ds in 2007. Several months before that, it acquired<br />
fruit <strong>an</strong>d tea drink-maker Fuze Beverages (<strong>The</strong>odore, 2008).<br />
<strong>This</strong> year, the comp<strong>an</strong>y acquired 40 percent of Honest Tea, giving it <strong>an</strong> org<strong>an</strong>ic ready-to-<br />
drink tea, as well as a presence in the natural foods retail ch<strong>an</strong>nel. It partnered with Minneapolis-<br />
based coffee chain Caribou Coffee on ready-to-drink coffee products in the United States <strong>an</strong>d<br />
Italy’s Illy Caffe internationally. Also internationally, the comp<strong>an</strong>y acquired Jugos del Valle in<br />
Mexico, <strong>an</strong>d it made <strong>an</strong> offer last month for the Huiyu<strong>an</strong> juice comp<strong>an</strong>y in China, which will be<br />
its second-largest acquisition, at $2.4 billion, if approved (<strong>The</strong>odore, 2008).<br />
But <strong>Coca</strong>-<strong>Cola</strong> Chairm<strong>an</strong> <strong>an</strong>d 2008 beverage Industry’s Executive of the year Neville<br />
Isdell says he did not w<strong>an</strong>t to see the comp<strong>an</strong>y or the industry forget about the core carbonated<br />
soft drink business in the rush to enter so m<strong>an</strong>y other categories. Isdell w<strong>an</strong>ted to kick-start that<br />
segment as well. <strong>The</strong> health <strong>an</strong>d wellness movement had made <strong>an</strong> enemy of carbonated<br />
beverages, but the primary concern was calories, Isdell has said. <strong>The</strong> comp<strong>an</strong>y beg<strong>an</strong> using the<br />
terminology “sparkling” beverages to dist<strong>an</strong>ce itself <strong>from</strong> the negative connotations that had<br />
taken over “carbonated soft drinks,” <strong>an</strong>d it focused much of its <strong>research</strong> <strong>an</strong>d development work<br />
on zero-calorie beverages (<strong>The</strong>odore, 2008).<br />
<strong>Coca</strong>-<strong>Cola</strong> Zero, a zero-calorie cola that incorporated a blend of aspartame <strong>an</strong>d<br />
acesulfame potassium to taste more like full-calorie sweeteners, hit the market in March 2005.<br />
<strong>The</strong> product steered clear of references to diet, <strong>an</strong>d even low-carbohydrate, which was the diet<br />
catch-phrase of the moment. Instead, it went with <strong>an</strong> edgy black label <strong>an</strong>d tie-ins to NASCAR,<br />
F<strong>an</strong>tasy Football <strong>an</strong>d other more male-oriented promotions. <strong>The</strong> strategy paid off in reaching<br />
male consumers who previously refused to drink diet products, <strong>an</strong>d last year the br<strong>an</strong>d hit the<br />
billion-dollar mark with sales in 55 countries. That made Coke Zero the comp<strong>an</strong>y’s most
<strong>Coca</strong>-<strong>Cola</strong> 9<br />
successful new product launch in 25 years, which coincidentally, was the introduction of Diet<br />
Coke. With both its diet bases covered, the comp<strong>an</strong>y devised what it calls the “three-cola<br />
strategy” for its trademark br<strong>an</strong>ds, with <strong>Coca</strong>-<strong>Cola</strong> Classic, Diet Coke <strong>an</strong>d Coke Zero each<br />
hitting a specific target audience (<strong>The</strong>odore, 2008).<br />
Water “the real thing”<br />
Along <strong>an</strong> industrial stretch of North Cobb Parkway in Marietta sits a bottling<br />
facility, owned <strong>an</strong>d operated by <strong>Coca</strong>-<strong>Cola</strong> Enterprises. It was built in 1968, a sprawling plateau<br />
of blond brick <strong>an</strong>d siding. On the front, facing the parkway, a weathered <strong>Coca</strong>-<strong>Cola</strong> logo h<strong>an</strong>gs<br />
next to a long tinted window. Inside, bottles wind down a gleaming silver production line,<br />
watched over by some of the facility's 112 workers. Unseen by passersby, however, are the<br />
millions of gallons of municipal water being pumped into the building, water which since 2001<br />
has been used to fill bottle after bottle of Das<strong>an</strong>i (Kwon, 2009).<br />
<strong>The</strong> Marietta facility is one of roughly thirty Das<strong>an</strong>i bottling pl<strong>an</strong>ts around the United<br />
States, each of them using water <strong>from</strong> local municipalities. <strong>The</strong> comp<strong>an</strong>y pays for the raw<br />
material, of course; in Marietta, <strong>Coca</strong>-<strong>Cola</strong> Enterprises buys water <strong>from</strong> Marietta Power &<br />
Water, which gets its supply <strong>from</strong> the Cobb County-Marietta Water Authority, which itself<br />
draws the water <strong>from</strong> the Chattahoochee <strong>an</strong>d Lake Allatoona. For every thous<strong>an</strong>d gallons above<br />
the 2,000-gallon mark, the Marietta utility charges $2.88. So in J<strong>an</strong>uary, for example, when the<br />
pl<strong>an</strong>t that bottles Das<strong>an</strong>i (along with other beverages. such as Diet Coke) consumed 9.6 million<br />
gallons, its water bill was likely around $27,000 (Kwon, 2009).<br />
That may look like a hefty bill, but considering the profitability of bottled water, it is<br />
more like a drop in the bucket. For example, a bottle of <strong>Coca</strong>-<strong>Cola</strong> <strong>an</strong>d a bottle of Das<strong>an</strong>i may<br />
retail for relatively the same, but a c<strong>an</strong> of Coke requires syrups <strong>an</strong>d flavorings, additives not
necessary for the production of Das<strong>an</strong>i. According to a four year study of the bottled water<br />
<strong>Coca</strong>-<strong>Cola</strong> 10<br />
industry by the New York, based Natural Resources Defense Council, a bottle's worth of water<br />
costs the m<strong>an</strong>ufacturer only around 10 percent of the products marked up price. <strong>The</strong> other 90<br />
percent goes to pay for things like bottling, packaging, shipping, retailing, a profit, <strong>an</strong>d of course<br />
marketing (Kwon, 2009).<br />
While 80 percent of Coke's business worldwide is in carbonated drinks, water is on the<br />
rise. Last year, the comp<strong>an</strong>y's soft drink sales in North America were down, while sales of "still"<br />
beverages such as Das<strong>an</strong>i were increasing. <strong>Coca</strong>-<strong>Cola</strong> Enterprises, the world's largest bottler of<br />
<strong>Coca</strong>-<strong>Cola</strong> products (<strong>an</strong>d <strong>an</strong> independent comp<strong>an</strong>y, though 35 percent owned by <strong>Coca</strong>-<strong>Cola</strong>),<br />
also credited growing still-beverage sales as contributing to its turnaround <strong>from</strong> a worldwide<br />
$1.1 billion loss in 2006 to a $711 million profit in 2007. And the bottled water market, already<br />
raking in $12 billion a year, is only getting bigger (Kwon, 2009).<br />
Intrinsic Value<br />
<strong>The</strong> legend of the Christmas benefactor with long white whiskers bearing gifts for good<br />
boys <strong>an</strong>d girls has its origins in St Nicholas, Bishop of Myra <strong>an</strong>d patron saint of Russia <strong>an</strong>d<br />
Greece, who lived in the third century. <strong>The</strong> image of S<strong>an</strong>ta with <strong>Coca</strong>-<strong>Cola</strong> red trousers, short<br />
trimmed jacket, <strong>an</strong>d shiny black boots <strong>an</strong>d belt, carrying a sack full of toys on his back, was<br />
firmly embedded in Americ<strong>an</strong> culture with <strong>an</strong> advertising campaign used by <strong>The</strong> <strong>Coca</strong>-<strong>Cola</strong><br />
<strong>Comp<strong>an</strong>y</strong> (Thorton, 2007).<br />
<strong>The</strong> m<strong>an</strong> responsible for creating the warm, friendly, rather plump gentlem<strong>an</strong> with the<br />
twinkling eyes <strong>an</strong>d rosy cheeks used in so m<strong>an</strong>y of Coke's advertising campaigns, is Swedish-<br />
Americ<strong>an</strong>, Haddon Sundblom (1899-1976). He designed the <strong>an</strong>nual <strong>Coca</strong>-<strong>Cola</strong> Christmas<br />
advertisements that r<strong>an</strong> <strong>from</strong> the early 1930s until 1964. <strong>The</strong> images depicting S<strong>an</strong>ta delivering
<strong>Coca</strong>-<strong>Cola</strong> 11<br />
<strong>an</strong>d playing with toys, raiding the fridge for a bottle of Coke, <strong>an</strong>d chatting with wakeful children,<br />
have been reproduced on Christmas collectibles ever since. <strong>The</strong>y appear on die cast trucks,<br />
jigsaw puzzles, tins of playing cards, pins, plates <strong>an</strong>d ornaments. <strong>The</strong> characters in the original<br />
oil paintings, which have been exhibited around the world, were based on real people. Sundblom<br />
first modeled S<strong>an</strong>ta after a friend, <strong>an</strong>d then, himself. <strong>The</strong> children he drew lived in the<br />
neighborhood <strong>an</strong>d even the dog featured in Sundblom's final advertisement belonged to a local<br />
florist (Thorton, 2007).<br />
Discussion<br />
As <strong>Coca</strong>-<strong>Cola</strong> enters <strong>an</strong> exciting new decade of growth, they do so with a strong<br />
foundation. Coke’s widely recognized <strong>an</strong>d valued br<strong>an</strong>ds, solid fin<strong>an</strong>cial position <strong>an</strong>d unmatched<br />
global presence gives great confidence that Coke c<strong>an</strong> continue to capture a growing share of the<br />
projected $1 trillion market for nonalcoholic ready-to-drink beverages by 2020. As global<br />
populations grow, economies exp<strong>an</strong>d, <strong>an</strong>d middle-class, urb<strong>an</strong> lifestyles emerge, Coke c<strong>an</strong> see <strong>an</strong><br />
environment that is very positive for a business that provides simple <strong>an</strong>d affordable moments of<br />
pleasure <strong>an</strong>d refreshment, for cents at a time, more th<strong>an</strong> one <strong>an</strong>d a half billion times every single<br />
day.<br />
Review of Findings<br />
<strong>The</strong> past year was one chapter in <strong>an</strong> ongoing growth story for <strong>The</strong> <strong>Coca</strong>-<strong>Cola</strong> <strong>Comp<strong>an</strong>y</strong>.<br />
It was <strong>an</strong> import<strong>an</strong>t year because it reaffirmed confidence in the comp<strong>an</strong>y’s ability to weather <strong>an</strong><br />
extraordinary global economic crisis <strong>an</strong>d continue to grow. Looking ahead to the year 2020,<br />
Coke m<strong>an</strong>agement is convinced that these next few years will be critical in defining the future<br />
for <strong>The</strong> <strong>Coca</strong>-<strong>Cola</strong> <strong>Comp<strong>an</strong>y</strong> <strong>an</strong>d system partners. In a growing world of refreshment, the<br />
opportunities ahead are tremendous.
Summary <strong>an</strong>d Conclusions<br />
<strong>Coca</strong>-<strong>Cola</strong> 12<br />
<strong>Coca</strong>-<strong>Cola</strong>'s longevity <strong>an</strong>d relatively strong perform<strong>an</strong>ce even during the recent stock<br />
market turmoil indicates that this is a stock that has the most appeal to long-term investors. <strong>This</strong><br />
is not a stock where investors c<strong>an</strong> "get rich quick" because it is going to have a revolutionary<br />
new product enter the market, as a high-tech comp<strong>an</strong>y might, nor is it a comp<strong>an</strong>y that pays large<br />
dividends. However, with a current dividend yield of 3 percent, smaller investors <strong>an</strong>d those who<br />
do not w<strong>an</strong>t to tie up their money for long periods of time may find this <strong>an</strong> attractive investment<br />
<strong>an</strong>d relatively safe in terms of principal for providing <strong>an</strong> alternative to savings accounts.
References<br />
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<strong>Coca</strong>-<strong>Cola</strong> 13<br />
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