Will Sugar Kill Coca-Cola’s Business Model?

Will Sugar Kill Coca-Cola’s Business Model?

Coke ranks as the 4th most valuable brand in the world behind Google, GE and Microsoft with a brand value of $58.2 billion.  Truly one of the world’s most iconic brands, does Coke have a business model issue as the drumbeat of the “empty calorie” movement intensifies?

A new report reveals that per capita soft drink consumption among U.S. children has increased by nearly 500% over the past 50 years. According to “Children’s Eating Habits in the United States.  According to the National Soft Drink Association (NSDA), consumption of soft drinks is now over 600 12-ounce servings (12 oz.) per person per year. Since 1978, soda consumption in the US has tripled for boys and doubled for girls.  The average American boy gets 10% of his daily calorie intake from soda.

Certainly Coca Cola and other beverage companies have benefited from this increased soda consumption.  Will the increased pressure to remove soda machines from schools or junk food taxes destroy Coke’s business model?  I doubt it. 

US sales account for only 37% of Coca-Cola’s revenues.  Even if soda consumption per capital in the US falls, consumption is growing elsewhere.  Soda consumption per capita in China is a measly 35-8 servings annually vs. nearly 800 annually per capita in the US.   Soda sales in Asia are growing over 15% annually.  Any decrease in US sales should be offset by increases in emerging markets.

It looks like Coke still “is it,” even with a junk food tax.


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