NEW YORK (TheStreet) -- What do Coca-Cola Zero, Fuze Tea, Ayataka, and Minute Maid Pulpy have in common? All four of these Coca-Cola (KO) - Get Report brands reached $1 billion in annual sales in under five years.
In total, Coca-Cola has 20 brands that have sales over $1 billion a year. In recent years Coca-Cola has shown the ability to rapidly scale brands to quickly generate growth.
Coca-Cola did not start out as a diversified global beverage powerhouse. The company sold only Coca-Cola soda from 1886 until 1940. In 1940, Fanta was developed (the company's second brand). Coca-Cola diversified into juice in 1960 with the acquisition of Minute Maid. Over the last five decades, Coca-Cola has slowly added brands to its portfolio and increased its geographic reach.
Coca-Cola's future growth potential comes from its competitive advantage in scaling new brands. Simply put, Coca-Cola has built the best global beverage distribution platform in the world. The company also has massive cash flows to market newly introduced brands.
Coca-Cola has grown 10 brands to billion dollar status since 2007. Of these 10, 9 are not soda brands (Coca-Cola Zero is the lone exception). The future of Coca-Cola is non-carbonated beverages like Fuze Tea, Ayataka, and Minute Maid Pulpy.
Upcoming brands for Coca-Cola include Honest Tea, Zico coconut water, and Fairlife enhanced milk beverages. All of these brands are non-carbonated and focus on health, in stark contrast to Coca-Cola's flagship Coca-Cola and Sprite brands.
The company's past performance is nothing short of spectacular. Coca-Cola is a Dividend King thanks to its 50+ years of consecutive increases. Coca-Cola is the most successful beverage business in the world.
Shareholders can expect solid returns going forward from Coca-Cola. The company currently has a dividend yield of over 3%. In addition, Coca-Cola's management is targeting earnings-per-share growth of 7% to 9% a year over the long run. Together, dividends and earnings-per-share growth give Coca-Cola investors an expected total return of 10% to 12% a year.
The Coca-Cola Zero, Fuze Tea, Ayataka, and Minute Maid Pulpy brands show the culmination of Coca-Cola's long history of growing its global distribution strength and brand recognition.
Coca-Cola Zero was launched in 2005. By 2007, the brand had already reached over $1 billion in annual sales. Coca-Cola Zero is the company's latest soda brand to reach $1 billion in annual sales.
Coca-Cola Zero's success is a result of the power of the Coca-Cola brand. Coca-Cola is the most popular soda in the world, by a wide margin. In the United States, it has more than double the market share of the next leading soda (Pepsi (PEP) - Get Report).
Coca-Cola Zero was launched to appeal specifically to calorie-conscious male consumers. The Diet Coke brand tends to appeal more to female consumers. The word "diet" is not as popular with men as with women. Coca-Cola Zero is Coca-Cola's "diet soda" answer for men.
Minute Maid Pulpy
Minute Maid Pulpy was launched in China in 2005. The Minute Maid Pulpy brand is separate from Coca-Cola's Minute Maid brand and is designed to appeal especially to Chinese consumers.
Minute Maid Pulpy has been extremely successful. The brand reached $1 billion in annual sales in 2010, after just five years on the market. The Minute Maid Pulpy brand is the first brand that Coca-Cola has launched exclusively in an emerging market to reach the billion-dollar-brand club.
Coca-Cola's success with Minute Maid Pulpy shows the company can modify a brand popular in North America to appeal to the tastes of a faster-growing emerging market. Coca-Cola is currently the global leader in ready-to-drink juice, and will very likely retain that position if it can continue to capitalize on faster-growing markets.
Ayataka is a calorie free green tea brand sold in Japan and Singapore. The Ayataka brand is meant to replicate the taste and experience of drinking traditionally brewed Japanese green tea.
Coca-Cola introduced Ayataka to Japan in 2007. By 2012, the brand reached $1 billion per year in annual sales. Ayataka managed rapid growth despite being released initially in only Japan. The success of Ayataka is a result of the drinks unique formulation.
When consumers swirl a bottle of Ayataka, they can see cloudiness and particles inside the beverage. This is a similar experience to authentically brewed green tea in Japan. The Ayataka brand is an on-the-go solution for traditional Japanese green tea drinkers.
Coca-Cola's success with Ayataka is an interesting study. The company realized excellent results by focusing on a specific niche within the Japanese beverage market. The company did not attempt to appeal to all consumers, and instead used a very defined beverage to appeal specifically to a certain sub-segment of consumer.
The Fuze Tea brand gives the best glimpse into the future of Coca-Cola. From the start, Fuze Tea was designed to be a global brand. Coca-Cola released Fuze Tea to 14 countries in 2012. In two years, the company reached the $1 billion in annual sales mark.
Fuze Tea is now sold in nearly 40 countries. The global success of Fuze Tea is a result of Coca-Cola's second-to-none global beverage distribution platform. Fuze Tea will very likely continue its rapid growth as it is introduced to more countries.
This article is commentary by an independent contributor. At the time of publication, the author was long PEP.