June 12, 2012
In today's edition of "Talking Stocks," analyst Austin Smith talks about a misperceived threat to the big beverage giants.
Many investors are worried about the news that New York City will be banning sugary drinks over 16 ounces. However, the ban doesn't apply to grocery stores, New York is still a small slice of the broader beverage market, and the big soda companies have alternatives to provide consumers in place of the restricted beverages. Of course, there is always the risk that bans like this permeate society in much the same way smoking bans started small and became the norm. That's a bigger issue, but tobacco companies have still prospered under these conditions, despite not having the same flexibility as beverage companies and facing more restrictive bans. Ultimately, this is a drop in the bucket for companies like Coca-Cola and PepsiCo, and investors shouldn't be worried by the news.
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