Coca Cola Presentation[1]

Coca Cola by,

Robin ToalBrock VestrumLeanna Privette

April Vassau

AgendaCompany OverviewIndustry & Competitors OverviewRatiosFuture StrategyRecommendation

Company OverviewHistory • 1886: John Pemberton, an Atlanta

pharmacist, stirred up a fragrant, caramel-colored liquid and carried it a few doors down to Jacobs' Pharmacy. Here, the mixture was combined with carbonated water and sampled by customers who all agreed -- this new drink was something special. So Jacobs' Pharmacy put it on sale for five cents a glass.  

• 1920-1960s: Coke was introduced overseas and became a partner of the Olympic games. By the time WWII was over, Coke doubled their bottling plants across the country and overseas.

Company Overview:History • 1960-1989: Coke adds new flavors to their

offerings such as Sprite, Minute Maid Juice, and Fantana. In 1982 Diet Coke was rolled out to a new health conscience audience and within 2 years became the top diet soft drink in the world.

• 1990s: A decade of consistent growth with the introduction of new products such as Powerade and Dasani bottled water.

• 2000-Now: 1.4 billion beverages are sold each day. Coke continues to look to delight its customers who reach for one of their products by focusing on what the demand is within local communities.

Coca Cola Brands

Industry OverviewNon alcoholic beverages represent 60% of

the beverage industrySoft drinks, fruit juices, bottled water, milk,

sports drinks, ready-to-drink tea & coffeeLeaders in this segment are Coca Cola &

Pepsi, which together hold over 50% of the market

The beverage industry is highly competitive on pricing, packaging, marketing, and developing new products which leads to pressures from shareholders to expand portfolio of brands

Industry Analysis – Share Price

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08

Q2

08

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08

Q1

09

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09

Q3

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09

Q1

10

7/16

/201

0$10

$20

$30

$40

$50

$60

$70

$80

Coca ColaPepsicoDPS

Pri

ce

Time

Competitors (Ticker)

MAIN COMPETITORSPepsico (PEP)Dr Pepper Snapple Group (DPS)2ND TIER COMPETITORSNational Beverage (FIZZ)Jones Soda (JSDA)Nestle (NESN)Kraft Foods (KFT)

Coke vs. Pepsi

Coke vs. Pepsi

Glob al Footprint Coffee & TeaSocial MediaKeeping an eye on DPS

Tests of Profitability

0.00

0.05

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0.15

0.20

0.25

0.30

2009 2008

EBIT Margin

Coke

Pepsi

2009 2008

Return on Equity 28% 28%

Return on Assets 15% 15%

Financial Leverage % 13% 13%

Earnings Per Share 2.93$ 2.49$

Quality of Income 1.20 1.30

Profit Margin 22% 18%

Fixed Asset Turnover 3.24 3.84

*EBIT Margin 27% 26%

Test of Profitability

0%5%

10%15%20%25%30%35%40%45%

Coke Pepsi Industry

Return on Equity

Coke

Pepsi

Industry

Tests of Liquidity

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1.00

1.50

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2009 2008

Current Ratio

Coke

Pepsi

0123456789

2009 2008

Inventory TurnOver

Coke Pepsi

2009 2008

Cash Ratio 0.51 0.36

Current Ratio 1.28 0.94

Quick Ratio 0.94 0.60

Receivable Turnover Ratio 9.05 9.97

Average Age of Receivables 40.33 36.60

Inventory Turnover Ratio 4.88 5.16

Average Days' Supply Inventory 74.73 70.71

Test of Liquidity

Tests of Solvency

2009 2008

Times Interest Earned 25.2 18.9

Cash Coverage Ratio 23.66$ 16.46$

Debt-to-Equity Ratio 1.20 1.40

Test of Solvency

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0.50

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2.50

2009 2008

Debt-to-Equity Ratio

Coke

Pepsi

Market Test

0.0% 1.0% 2.0% 3.0% 4.0%

2007

2008

2009

Dividend Yield

Pepsi

Coke

Coke PepsiCurrent P/E Ratio 17.3 16.15 Year High 26.3 27.45 Year Low 12.8 14.7

Dividend Yield Dividend Yield

2009 1.64$ 3.1% 1.78$ 2.9%2008 1.52$ 3.0% 1.65$ 3.1%2007 1.36$ 2.5% 1.43$ 1.9%2006 1.24$ 2.8% 1.16$ 1.9%

Test of Solvency

Coke Pepsi

Price / Earnings Ratio

Dividend Yield Ratio15

15.5

16

16.5

17

17.5

18

Coke Pepsi Industry

Price / Earnings Ratio

Coke

Pepsi

Industry

Future StrategyCoca-Cola’s 2020 Vision, the 6 P’s:Profit: More than double system revenue by 2020 while

increasing system marginsPeople: Be a great place to workPortfolio: More than double servings to over three billion a

day by 2020 and be #1 in the nonalcoholic ready-to-drink business in every market and every category that is of value

Partners: Be the most preferred and trusted beverage partner Planet: Be the global leader in sustainable water use and

industry leadership in packaging, energy and climate protection

Productivity: Manage people, time and money for the greatest effectiveness

SWOT AnalysisStrengths:

Leading market presence, built on strong brand Robust manufacturing and distribution capabilities Strong global footprint

Weaknesses: Destocking of products as the consumer preference shifts to

value brand productsOpportunities:

Growing per capita consumption in developing economies Acquisitions of major North American bottler Growing Non-Alcoholic ready-to-drink beverage industry.

Threats: Evolving consumer preferences Water scarcity and poor quality would impact production costs

and capacity

Recommendations

BUY!