Is Coca-Cola Taking Over the World?

It was revealed on Wednesday that Coca-Cola KO is looking to expand its reach worldwide by looking to smaller drink sizes to boost profits while simultaneously keeping rising commodity costs in check. KO is obviously already the biggest soft drinks maker in the world but, following first quarter earnings that beat estimates, it is looking to sell more drinks around the globe. It really was a great quarter for KO, with growth coming from all regions. However, Coke reported that increases were greater in emerging markets. Volume grew 9% in the region that includes Russia, India, the Middle East and Africa, compared with a 2% rise in North America. In addition, global volume for bottled water grew 15%, with energy drinks seeing a 25% increase. Still, CEO Muhtar Kent said that, "We believe North America is a growth market for our business." KO has looked to offset those rising commodity costs by putting out new drink sizes. Four years ago, it rolled out a 20-ounze on-the-go bottle. Since then, it has put out 14-ouce, 12-ounce and 12.5-ounce bottles. "Moms buy the mini-cans. They love if for their kids," Kent said. On Wednesday, JP Morgan released a research report stating that KO continues to put up solid volume growth in a majority of its geographies. Volume came in at 5%, ahead of our forecast for just south of 4%. Upside to our forecast came from NA (+2%, JPMe flat), Eurasia/Africa +9% (JPME +6%), and the Pacific (+8%, JPME +6%). In addition, volume in Europe and LatAm were in line, at +1% and +5%, respectively. In emerging markets, KO expects some slowdown in China in 2012 but still expects DD growth longer term. Morgan Stanley, meanwhile, said that Coke continues to gain global share position in beverages, placing it fundamentally among the best in our coverage universe. Strong demand was broad based with segment volume growth either meeting or exceeding consensus estimates across the board, which is encouraging.