6 Interesting Stories from the Coca-Cola System, Green Mountain Coffee Roasters, and PepsiCo

Interested in investing in Coca-Cola, Green Mountain Coffee Roasters, and PepsiCo? These recent developments may serve as a good starting point in your research.

Mar 10, 2014 at 3:36PM

This week's beverage industry headlines revealed some interesting happenings for Coca-Cola (NYSE:KO) and its bottlers Coca-Cola Enterprises (NYSE:CCE) and Coca-Cola Hellenic (NYSE:CCH) along with homemade beverage company Green Mountain Coffee Roasters (NASDAQ:GMCR) and snack and beverage giant PepsiCo (NYSE:PEP). These stories provide an interesting jumping off point for researching these companies.

Coca-Cola news
Coca-Cola recently announced the closing of the $1.25 billion investment in Green Mountain Coffee Roasters. Coca-Cola will purchase roughly 16.7 million shares of Green Mountain Coffee roasters for $74.98 per share, according to Coca-Cola's press release. Green Mountain Coffee Roasters will buy back some of the newly issued shares under its current "$1.1 billion share repurchase authorization" to reduce the dilution effect on its existing owners. Green Mountain Coffee Roasters will utilize some of the proceeds to develop a Keurig Cold system, eventually enabling people to mix a homemade glass of Coca-Cola products. 

In other news, Coca-Cola improved nine points on Oxfam's "Behind the Brands" sustainability scorecard and subsequently landed in the third spot according to the newsletter Bakery and Snack. Coca-Cola was only bested by food and beverage conglomerates Unilever and Nestle. None of the companies did so well, according to the article, with Coca-Cola only scoring 38 out of a possible 70. Nestle's score clocked in at 45 out of 70. 

According to Beverage Daily, John Brock the CEO of Western European Coca-Cola bottler Coca-Cola Enterprises told a group at a conference in Florida that still beverages aren't the happening thing in Europe like they are in America. The company's product mix leans toward 87% in sparkling volume. However, he would still like to acquire still brands but doesn't want to pay too much for them. Brock emphasized that private labels dominate the still brands business in Europe where no particular name brand dominates according to the presentation. 

Another Coca-Cola distributor, Coca-Cola Hellenic, faces product defect allegations in Nigeria according to Beverage Daily. The Socio-Economic Rights and Accountability Project or SERAP, a Nigerian not-for-profit organization reported the company and its local bottling partner to the United Nations. Specifically they face accusations of "rusty bottles crown corks," "rusty cans," and "foreign particles" in products in addition to not implementing a policy to remove out of date items from retailers' shelves. Coca-Cola Hellenic denies any wrongdoing. 

Green Mountain Coffee Roaster's new allies
Green Mountain Coffee Roasters added the Canadian chocolatier, Laura Secord, to its long list of K-Cup allies. The agreement with Laura Secord will last five years. The first line of hot chocolate K-Cups will come out this fall which includes an "intense and creamy hot chocolate variety." More hot chocolate varieties will come out in the latter part of 2015. Notably the products will be distributed online, in grocery stores, and retail -- specifically the chain of Laura Secord stores in Canada. 

PepsiCo has it under control
PepsiCo's presiding director of the Board of the Directors Ian Cook essentially told activist investor Nelson Peltz that the company has things under control and that the company will ignore Peltz's proposal to split the company's snack and beverage business to merge with Mondelez. Cook said, "I am writing to advise you that the board and management are comfortable and in complete alignment in rejecting your proposal." Interestingly, he also said "In short, the board and management have concluded that the financial engineering you propose erodes value for shareholders rather than creates value." Astute investors should pay particular attention to this last statement. PepsiCo possesses a mastery of marketing and selling of the two different types of products under various "demand occasions." Breaking up the snack and beverage businesses would provide severe disruption to the company's operation, culture, and relationships with client companies such as Yum! Brands and Buffalo Wild Wings. That last quote also emphasizes the one dimensional nature of the proposal: "financial engineering." 

Things to look out for
Coca-Cola's investment in Green Mountain Coffee Roasters will probably benefit the shareholders of the latter company more due to its relatively small size in terms of revenue.   However, it also gives Coca-Cola a new avenue of growth for its sparkling beverage business despite its relatively small accretion potential. People will still prefer prepackaged sodas for the foreseeable future due to the convenience factor.

Look for Coca-Cola Enterprises to make a non-sparkling acquisition in the near future and for the company to give continued focus on sparkling beverages over the midterm at least. This may prove detrimental as the healthy lifestyles movement continues to make an impact globally. Investors in Coca-Cola Hellenic need to eye this product defect issue in Nigeria as it could morph into a PR nightmare for the entire Coca-Cola system.

Investors should also look for Nelson Peltz to pack up his proverbial toys and go home while selling his PepsiCo stake in the process. Over the long-term PepsiCo shareholders will fare better without his influence. Feel free to add all these companies to your Motley Fool Watch List.

Put your money where your mouth is
Millions of Americans have waited on the sidelines since the market meltdown in 2008 and 2009, too scared to invest and put their money at further risk. Yet those who've stayed out of the market have missed out on huge gains and put their financial futures in jeopardy. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.

William Bias owns shares of Coca-Cola and Mondelez International. The Motley Fool recommends Buffalo Wild Wings, Coca-Cola, Green Mountain Coffee Roasters, PepsiCo, and Unilever. The Motley Fool owns shares of Buffalo Wild Wings, Coca-Cola, and PepsiCo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers