Has the fizz gone out of American’s love affair with soda pop? “It appears the U.S. hit peak soda at the end of the last decade,” The Daily Beast suggests.
“According to the Associated Press, in 1998, Americans on average drank 54 gallons of soda a year. But by the end of 2012, the total stood at just 44 gallons, a decline of 18.5%. Per-capita soda consumption in 2012, according to the trade publication Beverage Digest, fell to its lowest level since 1987, as total consumption dropped 1.2% in the year,” the website says.
What are the implications for investors? PepsiCo (PEP) was No. 7 and Coca-Cola (KO) was No. 25 on the list of the “Top 100 Companies Held by Our Members,” as published in BetterInvesting Magazine in April.
On July 24, PepsiCo reported quarterly earnings that were higher than expected, in part aided by price increases and productivity upgrades. PepsiCo, of course, makes a full range of food products, including Quaker Foods and Frito-Lay.
Still, The New York Times reported that JP Morgan analyst John Faucher said Pepsi’s results look better than they actually are. “The headline is much better than the net result,” Faucher said.
And the Dr. Pepper Snapple Group said on July 24 that net sales decreased 1 percent and earnings per share were down 8 percent.
The Times noted that a week earlier, Coca-Cola reported slow sales, citing poor weather. The 3% drop in revenue, with the slump in the U.S., China and Europe — Coke’s three biggest markets — led BloombergBusinessweek to suggest that the corporation hire a meteorologist.
Now wetting your whistle is a weather-dependent sport?
Fewer Americans are having a Coke and a smile. Some analysts cite the influence of the health police, battling on the twin fronts of obesity and the potential risks posed by sugar substitutes. Other say what’s on tap at the nation’s kitchen sinks is cheaper during economic hard times.
Can Big Soda hear the sucking sound when the straw hits the bottom of the empty soda glass? And is the glass anywhere near empty?
Bloomberg Businessweek quotes Coca-Cola Chief Executive Officer Muhtar Kent as saying during a conference call that the earnings dip was “more of an anomaly; we should not see this as a trend or a systemic issue.”
We’re not kicking the vending machine yet. But we’re a carbonated-caffeine addict, most likely to be busted by the health police.
BetterInvesting is a national nonprofit organization that has been empowering individual investors since 1951. Founded in Detroit, the association (formerly known as National Association of Investors Corporation) was born out of the conviction that anyone can become a successful long-term investor by following commonsense investing practices. BetterInvesting has helped more than 5 million people become better, more informed investors by providing webinars, in-person events, easy-to-use online tools for analyzing stocks and mutual funds, a monthly magazine and a community of volunteers and like-minded investors. For more information about BetterInvesting, visit its website at http://www.betterinvesting.org/investing/landing/openhouse/blog/index.html or call toll free (877) 275-6242.