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Drink It Up: Coca Cola Stocks Rise on Bubbles of National Manufacturing System
Friday , March 29 2024
Home / Business & Finance / Drink It Up: Coca Cola Stocks Rise on Bubbles of National Manufacturing System

Drink It Up: Coca Cola Stocks Rise on Bubbles of National Manufacturing System

While it may be cliché to say that the pot has just grown sweeter for Coca Cola, and their rising stocks, like bubbles in their beverage, they are rising up to the top of the glass; higher than they have been in four years in fact. The Atlanta based company reported substantial stock gains this quarter. Shares peaked at a 5.5 percent increase yesterday, trading at $42.31 at close of day.

The company’s net income actually declined slightly, however, falling 15 percent, or 39 cents a share to $1.75 billion. That’s down from $2.05 billion or 45 cents a share just a year earlier. Overall, profits were strong, leveling out at about 46 cents a share.

Some attribute the gains to Chief Executive Officer Muhtar Kent, who has parleyed the products into a firm position in the Latin American market, pushing sales of Coca-Cola branded soft drinks, Del Valle juices and Powerade.

“This is a first step in their eventual divestment of much of the U.S. bottling operations,” Thomas Mullarkey, an analyst for Morningstar Inc. (MORN) in Chicago, said today in an interview with the press. “They don’t want all those capital-intensive distribution assets sitting on their balance sheet in perpetuity.”

Same Drink, Different Bottling Routine

The changes are reflective of a change in stance for Coca Cola. Previously, the soft drink maker would sell franchise licenses to individual bottlers. The bottlers would handle packaging and distribution, and purchase concentrates of beverages from Coca Cola. Now, however, Kent is shifting control and management of these bottlers back over to Coca Cola.

Today marks the start of the changes, as bottlers shift back over to a national manufacturing system.

“We will ensure that the production is no longer franchised out,” Kent said. “It will be kept centrally managed coast to coast. It will be best practice.”

Counting yesterday, the shares for Coca Cola have increased by a healthy 11 percent this month, netting the company an 8.8 percent gain for Standard & Poor’s 500 Index.

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