Coca-Cola is doing a solid job reinvigorating its core carbonated soda business, with new sugar-free offerings and smaller can sizes. It is a highly innovative company that is improving and expanding its offerings in energy and sports drinks. Coke continues to increase the number of markets for its smaller, faster-growing brands (e.g., Costa Coffee), while also looking for acquisition opportunities. It has a strong management team and an admirable long-term strategy. It is simplifying its internal operations, focusing more on digital marketing and big data, and has recently eliminated many small, slow-growing brands. This should help sales and profits. Coke has a strong presence in growing emerging markets, such as China. As people in emerging markets enter the middle class, they often spend more on prepackaged beverages. Coke does have a tax dispute with the IRS that could be material, but the outcome remains uncertain. Coke had less than 2% of its sales from Russia last year, but that does not change our outlook. [The company has suspended its operations there, in light of the Russian invasion of Ukraine.]
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