A Trefis cash-flow analysis finds that
Minute Maid orange juice brand is significantly more valuable than rival
That's because Minute Maid has a higher international market share and better profit margins.
The two biggest global soft-drink manufacturers compete across nearly all drink categories, including orange juice. We estimate that Minute Maid constitutes about 8% of our stock price estimate for Coca-Cola, or $11 billion out of the company's total value of $138 billion. Tropicana also constitutes close to 8% to PepsiCo's stock, but we think the business is worth about $8.4 billion based on PepsiCo's estimated total value of $106 billion. Our analysis follows below.
Tropicana leads the U.S. fruit juices & energy drinks market with a unit share of about 9% compared to 7.8% for Minute Maid. In unit terms, the U.S. juice and energy drink market totaled an estimated 4.7 billion cases in 2009.
But Minute Maid is far ahead of Tropicana in the international market, which totaled 9.9 billion cases in 2009. Minute Maid accounted for nearly 13% of the international market compared to about 5% for Tropicana.
We expect Minute Maid's international share to stay roughly flat during our forecast period. You can drag the trend-line in the chart below to create your own Minute Maid share forecast and see how it impacts Coca-Cola's stock.
Minute Maid's gross profit margins were about 64% in 2009, compared to 53% for Tropicana.
Thus a combined impact of higher margins and international market share results in higher cash flows for Minute Maid compared to Tropicana, making it a more valuable business.
You can see the complete $60 Trefis stock price estimate for The Coca-Cola Company
and our $67 Trefis stock price estimate for PepsiCo
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