This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Coke and Pepsi May Be Losing Their Fizz

NEW YORK ( TheStreet) -- Have you ever tried to put down a bowl of cola-flavored liquid -- carbonated or non-carbonated -- in front of your dog or cat? Chances are they'll take one sniff and turn up their noses.

More and more homo sapiens are having the same reaction, and that has companies Coca-Cola (KO - Get Report) and Pepsico (PEP - Get Report) sweating big, anxious drops.

In an article last weekend in The Wall Street Journal titled "Is This the End of the Soft Drink Era?", author Mike Esterl made a timely observation:

As U.S. consumption of soda beverages slipped over the past eight years, the beverage giants typically were able to raise prices enough to keep soda revenue growing.
But soda sales at U.S. stores declined in the send half of last year -- including the holidays, when partygoers normally pay up to gulp more.

The baby-boom generation, still over 73 million in number, is becoming more concerned about the ramifications of ingesting too much sugar or artificial sweeteners.

"The question from here is if that is the new norm," Steve Powers, a beverage analyst at Sanford C. Bernstein, told the Journal after reviewing the latest store sales numbers. Last year the sale of carbonated, flavored sugary beverages (a.k.a. "soda") declined by 0.6% to $28.70 billion at American stores. In terms of volume the sales actually dropped by almost 2%.

The article quoted statistics by SymphonyIRI Group, a consulting company that claims to be "...a global leader in innovative solutions and services for the CPG, retail and health-care industries." Its clients are most of the members of the Fortune 100 CPG and retail companies.

In a news story on Tuesday, SymphonyIRI said its fourth-quarter 2012 MarketPulse survey "found that shopper sentiment dropped to its lowest point since Q3 2011. While consumers across all age groups feel the strain of ongoing economic strife, those aged 35-54 convey particularly gloomy attitudes, with 43% stating that their financial situation deteriorated in 2012."

This doesn't help the angst that management is feeling at both KO and PEP. The chart below clearly illustrates what's been unfolding when it comes to KO's share price and the trailing-twelve-month revenue-per-share direction.

KO Chart KO data by YCharts

There are two conclusions I draw from this chart. First, there appears to be good support at around the $36-a-share level. The second is that revenue per share, which had moved up buoyantly for most of 2012, apparently didn't fare as well in the fourth quarter, which KO reports on Feb. 12.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
KO $40.66 0.00%
PEP $96.50 0.00%
AAPL $127.60 0.00%
FB $83.09 0.00%
GOOG $535.38 0.00%

Markets

DOW 18,034.93 +208.63 1.17%
S&P 500 2,100.40 +19.22 0.92%
NASDAQ 4,994.6020 +62.7870 1.27%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs