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) 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)).
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.