The Coca-Cola Company
Coca-Cola’s revenue has been going down steadily over the past decade. However, their net income has remained much the same. In 2011, their revenue was $46 billion, and in 2020, their revenue was a much lower $33 billion.
Coca-Cola has been able to keep their income steady because of their higher profit margins. Below is a breakdown of their revenue and income lows and highs:
- Highest: 2012 = $48 billion
- Lowest: 2017 = $31 billion
- Highest: 2013 = $9.3 billion
- Lowest: 2017 = $8.2 billion
Coca-Cola’s return on equity has been increasing substantially over the past decade going from 28% in 2011 to 43% in 2020. Coca-Cola is one of the largest food companies globally and is one of few companies to earn substantially higher than a 20% return on equity year after year.
As the company has shifted towards selling the Coca-Cola branded syrups more than their canned or bottled products, their returns on equity have gone up. Coca-Cola’s most popular brands include Sprite, Diet Coke, Coke, Fanta, Dasani, and hundreds of others, each of which is offered as a syrup product sold to distributors or in bottled or canned products such as the ones found at the store.
The Coca-Cola Company is also heavily reliant on its bottling partners, such as The Coca-Cola Bottle Co., which is a separate company and does a large amount of the bottling of Coca-Cola’s products. Their bottling partners are another critical reason they can earn such high returns on equity since the bottling company is the one that has to carry most of the tangible assets on its balance sheet.
Below are the highs and lows of Coca-Cola’s ROE over the past ten years:
- High: 2018 = 52%
- Low: 2012 = 27%
Coca-Cola currently has a market cap of $238 billion.
PepsiCo’s income and revenue have been relatively flat over the past decade. More and more consumers start to rethink their beverage consumption options with high concentrations of sugar and caffeine. PepsiCo’s most popular drinks include Pepsi, Diet Pepsi, Mountain Dew, Gatorade, Aquafina, and dozens of others.
However, unlike The Coca-Cola Company or Keurig, PepsiCo also has an extensive business of packaged foods. Some of PepsiCo’s most popular food products include Lays, Doritos, Ruffles, Cheetos, Fritos, and many other packaged goods.
Even with such ownership in well-known brands, the company’s revenue has only gone from $66.5 billion in 2011 to $70.3 billion in 2020, just a 5.7% increase.
When compared to Coca-Cola’s income and revenue figures, it’s plain to see that PepsiCo operates at much lower profit margins, primarily due to the high amount of tangible assets needed to produce their food and beverages. At the same time, Coca-Cola offloads these heavy assets to their bottling partners.
PepsiCo currently has a market value of $203 billion.
Keurig Dr. Pepper
Keurig and Dr. Pepper went through a merger and, in 2018, combined their income and revenue sources. In 2018, the combined company made $7.4 billion in revenue and $589 million in net income. In 2021, the company is projected to make $12 billion in revenue and over $1.5 billion in net income.
Their brands include Dr. Pepper, 7-Up, Crush, Green Mountain, Peet’s Coffee, Snapple, and dozens of others.
The company continues to battle with The Coca-Cola Company and PepsiCo over market share for the carbonated soft drinks industry but is still far behind the two companies. While PepsiCo offers soft drinks and numerous well-known snacks such as Lays chips, they are still not as large as The Coca-Cola Company, which has dominated the industry for decades, particularly overseas, where most of its sales come from.
Keurig Dr. Pepper currently has a market cap of $52.3 billion.
The revenue for the Monster Beverage company has been going up consistently over the past ten years. In 2011 they brought in $1.7 billion in revenue and $286 million in net income. In 2020 the company made $4.5 billion in revenue and $1.2 billion in net profit.
The Coca-Cola Company owns a large share of Monster Beverage and shares some of its bottling resources. Given that much of the bottling of Coca-Cola and Monster is done by other companies such as The Coca-Cola Bottling Company, they can earn much higher profit margins and returns on equity than other beverage makers since the capital-intensive assets aren’t under their control.
The company currently has a market cap of $49 billion and a Price/Earnings ratio of 34.
Beverage Industry Market Share:
The Coca-Cola Company controls 42.3% of the beverage market.
PepsiCo controls 29.5% of the market.
Keurig Dr. Pepper Inc. controls the remaining 24% of it.
This article has been reprinted with permission from William Douthat’s Linkedin page.