Cola-Cola Investors: Who's Involved?

Coca-Cola is one of the most well-known brands in the world, with its distinctive red and white logo recognised by a large portion of the global population. The company offers over 500 brands and 3,500 beverages in more than 200 countries and territories. It has consistently been ranked as the top soft drink brand worldwide, with a global brand value of over $98 billion. The company's advertising campaigns are innovative and memorable, contributing significantly to its success. Coca-Cola has a market value of $203 billion and spends approximately $5 billion on advertising annually. The company's revenue has fluctuated in recent years, reaching around $46 billion in their most recent financial year.

In terms of investments, if an individual had invested $1,000 in Coca-Cola stock when Warren Buffett did in 1988, that investment would now be worth $23,326.78, not including dividends. This represents an average annual return of 67.7%. Additionally, if someone had invested $1,000 in Coca-Cola 10 years ago, as of February 15, 2019, that investment would have been worth more than $2,800.

Coca-Cola's IPO in 1919

On September 5, 1919, Coca-Cola went public with an initial public offering (IPO) on the New York Stock Exchange (NYSE). The company issued 600,000 shares of publicly available stock at $40 per share. This came after a group of businessmen led by Ernest Woodruff purchased the company from Candler for $25 million.

By the time of the IPO, Coca-Cola was already a well-known brand. Created by pharmacist John Pemberton in 1886, the drink had grown in popularity and was consumed in every state across the country by 1895. By 1913, one out of every nine Americans had tried it, and the company was opening bottling plants around the world.

The IPO price of $40 per share has since seen 11 stock splits, including one stock dividend in 1927. As of 2012, a single share of Coca-Cola stock purchased at the IPO price in 1919 and held with dividends reinvested would have been worth $9.8 million. As of 2016, the same share would have been worth $12,748,802, an annual growth rate of 14.11%.

Coca-Cola has a history of stability, strong brand recognition, and overwhelming consumer loyalty, which have contributed to its popularity with investors. The company has also demonstrated a commitment to long-term brand equity, increasing advertising costs during challenging economic periods, which has helped it emerge from crises relatively strong.

Coca-Cola's advertising campaigns

Coca-Cola has a long history of memorable advertising campaigns that have contributed to its success as the world's most popular soft drink. Here is a detailed look at some of their most notable campaigns:

Hilltop (1971)

The iconic "Hilltop" ad featured a diverse group of people gathering on a hilltop, singing together. It included the song "I'd Like to Teach the World to Sing" by The New Seekers, which became synonymous with Coke. Despite some modern critics, the ad remains significant and was even featured in the final moments of the Mad Men series finale in 2015.

Holidays are Coming (1995-present)

The "Holidays are Coming" ad, with its signature sleigh bells and brightly lit truck, has become a staple of the holiday season. Coca-Cola has long associated itself with festive cheer, but this ad cemented the connection. It evokes the holiday spirit with its snowy scenes, atmospheric music, and excited children. In 2018, the campaign focused on Coke Zero to appeal to younger consumers and address sugar content regulations.

The Polar Bowl (2012)

The polar bears, a frequent feature in Coca-Cola's advertising since 1993, took centre stage in this Super Bowl XLVI halftime campaign. Coca-Cola extended the ad beyond the TV slot by encouraging viewers to visit a website and follow the polar bears' real-time reactions and interactions with the game. This innovative approach recognised the prevalence of second screens during the Super Bowl.

Uplifted Alex (2017)

Coca-Cola sponsored the virtual star of FIFA 2018, Alex Hunter, in this campaign. The ad showed a dejected Hunter being encouraged by a young fan over a can of Coke Zero. Coca-Cola's sponsorship of a fictional video game character demonstrated a unique approach while also investing in the growing world of eSports.

Coke Factory (2006)

This animated ad marked a departure from Coca-Cola's typical style. It offered a whimsical take on the inner workings of a vending machine, with a host of creatures collaborating to create the perfect bottle of Coke. The creative animation was produced by Wieden + Kennedy Amsterdam.

Always Coca-Cola (1993)

The "Always Coca-Cola" campaign, including the iconic "Northern Lights" commercial, introduced polar bears into Coke's branding. The company experimented with computer animation, and the heartwarming connection between Coca-Cola and polar bears has endured.

Share a Coke (2011)

One of Coca-Cola's most famous campaigns, "Share a Coke," began in Australia and New Zealand, placing popular names on Coke bottles to drive sales and social conversation. It quickly expanded globally, increasing consumption and social media impressions. The campaign utilised storytelling and individualised appeal to create a memorable and effective advertising experience.

Coca-Cola's stock splits

Coca-Cola's stock has split 11 times since it was listed on the stock market in 1919. The stock splits have occurred on the following dates: 1990, 1992, 1996, and 2012.

A stock split is when a company decides to divide its existing shares into multiple new shares to make the share price more affordable for investors. In the case of Coca-Cola, its stock has split in a 2-for-1 ratio, meaning that for every one share of stock owned, investors received an additional share, resulting in twice the number of shares at half the price.

For example, if an investor owned 100 shares of Coca-Cola stock before a stock split, they would own 200 shares after the split, with each share being worth half the original price. Stock splits are often seen as a positive sign as they can indicate that a company's stock price has been performing well and the company wants to make its shares more accessible to a wider range of investors.

Over the years, Coca-Cola's stock splits have contributed to the company's share count blossoming. As of 2023, Berkshire Hathaway, a company with a longstanding investment in Coca-Cola, owns 400 million shares of the company, making up around 8.5% of its portfolio. This makes Berkshire Hathaway the owner of over 9% of Coca-Cola's shares.

Coca-Cola's dividends

Coca-Cola has been a staple holding in the portfolio of Warren Buffett's Berkshire Hathaway since 1988. It is one of the largest bets on a public company by the legendary investor. Berkshire Hathaway now owns over 9% of Coca-Cola's shares.

Coca-Cola has paid dividends to its shareholders quarterly. The last ex-dividend date was on 14 June 2024, with a dividend payment of $0.48 per share made on 1 July 2024. The company's annual dividend yield is 2.98%.

Coca-Cola's dividend payout ratio is 69.23% ($1.89/$2.49), which is sustainable. The dividend payout record can be used to gauge the company's long-term performance when analysing individual stocks.

If an investor had invested $1,000 at the same price and time as Berkshire Hathaway, that investment would be worth $23,326.78 today, based on a price of $60.95 at the time of writing, and not including dividends.

Coca-Cola's acquisitions

Coca-Cola has made several acquisitions over the years, with the goal of diversifying its portfolio and expanding its global reach and dominance. Here is a detailed overview of some of Coca-Cola's notable acquisitions:

Minute Maid (1940s)

The Minute Maid juice brand, then known as the Florida Foods Corporation, was acquired by Coca-Cola in the 1940s. This acquisition marked a pivotal moment in the history of two iconic American beverage companies. Coca-Cola's desire to diversify into new markets led to the largest cash transaction in history at the time, valued at over $500 million. With this purchase, Coca-Cola instantly became a major player in the juice industry and gained access to Minute Maid's citrus groves and production facilities.

Waters & Robson (1980)

In 1980, Coca-Cola acquired Waters & Robson, one of Australia's first establishments to bottle and distribute Coca-Cola. This acquisition consolidated manufacturing assets and provided Coca-Cola with full access to established national distribution channels, accelerating its growth in the Australian market during the 1980s and 1990s.

Columbia Pictures (1982)

Coca-Cola's acquisition of Columbia Pictures in 1982 for $750 million marked its ambition to expand beyond beverages into the entertainment industry. This deal sparked curiosity about the potential mix of cinema screens and soda fountains. While Coca-Cola sought to advance its branding worldwide through films, the complex nature of talent management and long production timelines in the film industry led to challenges. Eventually, Coca-Cola sold Columbia Pictures to Sony Corporation in 1989.

Fuze Beverage (2007)

Coca-Cola acquired Fuze Beverage in 2007 for a reported $250 million. Fuze Beverage was a leader in formulating vitamin-enhanced refreshments, and this acquisition marked Coke's largest investment in the health-conscious beverage market at the time. By leveraging its distribution system and marketing capabilities, Coca-Cola quickly turned Fuze into a top-enhanced beverage brand.

Honest Tea (2008/2011)

Coca-Cola first acquired a 40% minority stake in Honest Tea, a startup aiming to make natural, lightly sweetened bottled tea, in 2008 for an estimated $43 million. In 2011, it completed the acquisition by purchasing the remaining 60% for a reported valuation of over $1 billion. This acquisition allowed Honest Tea to expand beyond natural food stores and drove significant growth in sales.

Costa Coffee (2018)

In 2018, Coca-Cola acquired Costa Coffee, a leading coffeehouse chain in Britain, for $5.1 billion. This acquisition aligned with Coca-Cola's strategy of transitioning into a total beverage company and provided vast growth opportunities, especially in the booming coffee space. By leveraging Costa's customer base and expertise, Coca-Cola gained credibility in the highly competitive global coffee shop market.

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