Many of the Coca-Cola Company's (NYSE: KO) recent brands have come from acquisitions, a far cry from when the company developed most of its product lines in-house. By purchasing respected brands, Coca-Cola has been able to respond quickly to changes in consumer tastes toward healthier options, sports drinks and energy drinks and away from sugary soft drinks. In addition to purchasing brands to support revenue growth, Coca-Cola also owns several bottlers around the globe.
Coca-Cola owns 16.7% of the Monster Beverage Corporation, which it purchased in 2015 for approximately $2.15 billion. In addition to the equity stake, both companies have entered into a strategic partnership related to business transfers and expanded global distribution. Coca-Cola transferred ownership of all of its worldwide energy businesses including NOS, Full Throttle and nine smaller brands to Monster. Monster transferred all of its non-energy drink businesses to Coca-Cola, including Hansen's natural sodas, Peace Tea, Hubert's Lemonade, and Hansen's juice products. This partnership makes financial sense for both companies – especially for Coca-Cola since its energy drink product line was lacking before the Monster deal. With Coca-Cola's global distribution system and Monster's popular products, expect increasing energy drink revenues from the new international distribution agreements. With Monster's stock currently flying high (recently closing at $56.83 on October 24, 2017), some analysts are wondering if a full takeover is on the cards.
FUZE beverages were founded by Lance Collins in his basement in 2000 and produced a variety of juices and teas. By 2005, the company was shipping 8 million cases of vitamin and mineral-enriched juices and teas. Coca-Cola purchased FUZE in 2007 for $250 million. Since then, FUZE has expanded internationally and now offers over 30 different varieties of tea and fruit juices. When Coca-Cola purchased FUZE, it came with the rights to NOS energy drinks and Waterplus.
Coca-Cola pursued Glaceau, the makers of Vitamin Water, and secured the acquisition in 2007 for $4.2 billion. This was another strategic move to improve Coca-Cola's product lineup in the non-carbonated beverages category. Vitamin Water has been touted as one of Coca-Cola's best purchases and is currently available in over 26 countries.
Minute Maid Brands
In 1960, Coca-Cola acquired Minute Maid in its first-ever venture outside of the carbonated beverage category. Minute Maid is the market share leader in frozen concentrate drinks and trails rival PepsiCo's Tropicana for ready-to-drink juices. Minute Maid is one of Coca-Cola's valued billion-dollar brands and will continue to help it cater to consumers who want healthier options, such as juice.
The Minute Maid brand founded the Simply line in 2001. Simply includes its main product, orange juice, and several other juice and beverge lines, such as lemonade, apple juice and grapefruit juice. Simply has also become another billion-dollar brand for Coca-Cola.
Bottlers Investment Group
One of the most valuable pieces of Coca-Cola's unique business model is its global distribution system through independent bottlers. Coca-Cola has sought to consolidate its bottlers to ensure financial strength and stability within its distribution network. The global distribution system includes over 250 independent bottlers and employs over 45,000 people. From time to time, some of these bottlers have run into financial trouble or struggled with regional market conditions.
The group was created in January of 2006 to purchase and invest in struggling bottlers. Once profitable, the goal was to resell the bottler to a suitable buyer. The group originally began with struggling bottlers in seven countries. Today, the group manages bottling operations in 19 markets that represent more than 25% of the total system volume. The company continues to look for suitable buyers for these operations, but the group remains one of Coca-Cola's largest and most valuable assets.