Coca-Cola Co.: Reiterate OW: Moo-ving the Needle; Fairlife Capacity Ramp on Top of Pricing Strength Drives Sustained OSG Outperformance

研报英文原文证据摘录

Coca-Cola Co.: Reiterate OW: Moo-ving the Needle; Fairlife Capacity Ramp on Top of Pricing Strength Drives Sustained OSG Outperformance

Pricing Power: We see Coke's LT durable pricing

power as higher than peers, both at: 1) the corporate level, having earned it with: a)

sustained market share gains, and in our minds clear LT competitive advantage; b)

solid historical volume growth despite outsized pricing, which signals more room at

a consumer level for continued pricing, and c) increased marketing spend in recent

years (+5% in 2025, well above peers at -6%, and +27% since a pre-COVID FY2019,

well above peers at +4%), both on an absolute basis and relative to peers.

Beyond pricing earned at the corporate level, KO has pricing power based on its: 2)

favorable product category and geographic exposure with a greater degree of

pricing power in: a) beverages, which as a product category offers higher pricing

power in our minds at the consumer level as low private label penetration limits

trade-down risk, at the retailer level as fragmented channel mix limits retailer

balance of power, and at the manufacturer level as concentrated share limits

competitive intensity; b) its skew to emerging (international) markets, where

consumers are more accustomed to inflation and Coke skews at 33% EM (60% int'l)

revenue mix higher than 24%/41% at peers.

Key Point #4-ST Visibility Higher in Emerging Markets, as is LT Growth Potential:

Emerging markets are holding up well post the Iran conflict so far based on CPG

company feedback, and we highlight Coke's LT advantage from greater exposure to

higher growth emerging markets (33% of KO mix vs 24% at peers), which offer a)

higher population growth, b) greater trade-up potential, and c) superior pricing

power.