Coca-Cola Will Outlive Its Competitors
Jeffrey B. Brown submits:
Coca-Cola (KO) announced yesterday that it will raise its dividend from $0.41 to $0.44 a share. This respectable dividend increase provides an excellent excuse to discuss the company that turned a once non-existent industry into a consumer staple. In 2004, the average American drank 53.7 gallons of carbonated soft drinks.
The consumer soft drink industry has enjoyed immense growth over the last few decades. From 1970 to the mid-1990s, Coke and Pepsi (PEP) each achieved average revenue growth of 10% annually. Each now features a widely diverse product line, but originally carbonated soft drinks (CSDs) alone propelled historical growth. The rivalry between Coke and Pepsi was mutually beneficial, as U.S. and worldwide CSD consumption rose year after year.
In the mid-1990s, the industry began to plateau because most people in the industrial had finally been exposed to soft drink products. At this point, rapid diversification occurred and new product lines were introduced, each requiring their own R&D costs. A once-uncomplicated market became flooded with substitute products. Even so, Coke’s profit rose 18% in 2009, benefiting from growth in markets outside of North America and Europe.
Investing, Long Term Investment, stock market | admin February 19, 2010
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