October 26, 2020 BARRON’S 25
“The externalities of the core busi-
ness are now starting to be reflected in
the stock price,” Ubben said at a Reu-
ters conference on ESG investing. In
June, he retired from ValueAct Capital
to start Inclusive Capital Partners.
Coke says that its overall recycling
rate is 60%, with plastic bottles at
about 55%. It aims to get to 100% by
- Just 10% of its plastic contain-
ers are from recycled material.
It’s harder to finesse the obesity
issue. Coke gets a high percentage of
sales from sugary drinks.
In response, Quincey points to the
growth of no-sugar brands like Coke
Zero sugar, reformulations of existing
brands to lower sugar, and an emphasis
on smaller packaging sizes.
“We have a clear strategy to be part
of the solution,” he says.
Coke says that 45% of its brands are
“low” or “no” sugar, which it defines as
about 17 grams or less per 12-ounce
can. A 12-ounce can of regular Coke
has 39 grams of sugar and 140 calories.
But just 29% of its sales volume
comes from low- or no-sugar drinks.
Smaller packages, like the popular
7.5 ounce cans of Coke with 90 calo-
ries each, are what the company calls
a more permissible “treat.” The
smaller cans also generate about dou-
ble the profits to the Coke system.
Few big consumer companies have
been hit harder by the pandemic than
Coca-Cola. Yet, as people start heading
back to restaurants, stadiums, arenas,
and concerts and other events in an
increasingly Covid-19-vaccinated
world—perhaps as early as next year—
the beverage giant’s out-of-home expo-
sure could be a positive catalyst for its
shares. With good news on Covid vac-
cines, the move into Coke shares could
even start later this year.
In the interim, investors can en-
joy a 3%-plus yield—and a Coke
beverage. As the company’s ads say,
“Together Tastes Better.”B
More Fizz
Coca-Cola has set a number
of financial targets.
Organic Revenue 4% to 6%
Operating Income 6% to 8%
Earnings per Share 7% to 9%
Free Cash Flow 90%to95%
Conversion
Annual Growth Target
Source: company reports
HOW DO YOU MANAGE
RISK WHEN THE WORLD IS
UPSIDE DOWN?
We can't control what's next, but we can help navigate it. CME Group provides 24-hour
access to trading opportunities in every investable asset class, allowing market participants
worldwide to manage risk and capture opportunities. For every economic twist and turn,
when the new normal is anything but... CME Group.
VISIT CMEGROUP.COM/ACTION
Derivatives are not suitable for all investors and involve the risk of losing more than the amount originally deposited and any profit you might have made. This
communication is not a recommendation or offer to buy, sell or retain any specific investment or service. Copyright © 2020 CME Group Inc. All rights reserved.