Yahoo Finance Why Coca-Cola won't be selling alcohol
Don’t expect to find a rum and Coke can at your local convenience store in 2019.
“No,” was the matter-of-fact response by Coca-Cola President and CEO James Quincey when asked by Yahoo Finance if alcoholic drinks would be coming to the U.S. next year from the soda master. “In the end, we have so many more things to do — and so many more opportunities that are closer to the sweet spot of what we know how to do in the U.S. and many other markets.”
“As strange as it sounds, Coca-Cola (KO) does have permission to be in the alcoholic beverage market. Its category is beverages,” said Tom Dougherty, president and CEO of brand company Stealing Share.
The question on its interest in hawking booze is a logical one to ask of the beverage giant. For starters, the global alcoholic beverage market was valued at a hearty $1.4 trillion in 2017, according to Allied Market Research. It’s expected to reach $1.7 trillion by 2025, notching a 2% compound annual growth rate from 2018 to 2025.
That’s a big market dominated by the likes of Diageo (DEO), Constellation Brands (STZ) and Anheuser-Busch Inbev (BUD) that Coca-Cola is neglecting.
Meanwhile, Coca-Cola has teased investors into thinking an alcohol push is next in line.
Coca-Cola set social media ablaze earlier this year as it launched its first alcoholic drink in Japan. The three fizzy, citrus-flavored drinks boast alcohol levels in the range of 3% to 8%.
A worker watches a product line at Coca-Cola Ebina plant in Ebina, Kanagawa Prefecture, near Tokyo. Coca-Cola may be getting into the booze business again by developing a bubbly alcoholic drink in Japan. (AP Photo/Shizuo Kambayashi, File)
And Quincey has shown an interest in expanding Coca-Cola’s reach into new categories by tapping the company’s hefty cash pile. In August, Coca-Cola spent $5.1 billion to get into the European coffee business by buying Costa Coffee. The company gained 4,000 retail coffee stores in the process.
Earlier that month, Quincey signed off on a minority stake in surging better-for-you sports drink brand BodyArmor.
“The main hindrances for anyone getting into this market is that there are so many competitors and drinkers tend to be a fickle bunch. Walk into any store and there are rows and rows of beers, wine and other alcohol brands. It’s a difficult market to create preference because, with so much choice, brand loyalties often sway with the wind,” explains Dougherty.
Another sin product Coca-Cola is staying clear of for now? Cannabis.
Quincey told Yahoo Finance Coca-Cola has no plans to enter the cannabis drink space.
In September, Coca-Cola said it was “closely watching” the space and had not yet decided on whether to get involved.
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Brian Sozzi is an editor-at-large at Yahoo Finance. Follow him on Twitter @BrianSozzi
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