Sector News

Coca-Cola won’t rule out further acquisitions or move into alcohol

November 17, 2017
Food & Drink

Coca-Cola won’t rule out future bolt-on acquisitions or expansion into alcohol, though the latter “doesn’t make sense” at this moment in time, according to CEO James Quincey.

Quincey was talking to broadcaster CNBC at Coca-Cola’s first investor day for eight years, in which the soft drinks giant reaffirmed its full-year guidance.

As well as saying that Coca-Cola would continue to chase bolt-on acquisitions, Quincey addressed speculation that Coca-Cola might expand into alcohol mixers or even alcoholic drinks in an effort to drive further growth.

“Philosophically, I never say never about most things, but the way I look at it there’s just so much more we already have strength and capability in [that] it just doesn’t make sense to do that next,” he told CNBC. “It makes more sense to do things that are more synergistic with your consumers and your capabilities as a company and a system.”

Quincey wouldn’t be drawn on whether Coca-Cola might increase its stake in Monster Beverage – currently 16.7% – or even buy the energy drink maker outright.

But he outlined three areas of focus that would continue to drive Coca-Cola’s growth strategy, including mergers and acquisitions, in the coming years.

He continued: “Whether it’s a bolt-on or it’s anything transformational, it’s always got to obey three criteria: there’s a strategic fit, there’s a logic strategically, and the numbers financially add up, and there’s opportunity. It takes two to tango.”

Coke last made a move for Anheuser-Busch’s stake in its Coca-Cola Beverages Africa joint venture as part of AB’s sell-off of assets related to its merger with SABMiller.

At the time, the company said it would look to refranchise the territory – worth more than $3 billion – among its existing bottlers.

That was preceded in September by a €10 million move Coca-Cola HBC’s stake in Lithuanian water company Neptuno Vandenys.

As critical of sugar taxes as ever, Quincey also told CNBC: “When we can take action, we absolutely have the responsibility to do so, but we believe that solving the obesity crisis, which does need to be solved, will require a much broader response from private companies and the government rather than thinking a narrow tax is going to solve it.”

Quincey took over from Muhtar Kent as CEO of Coca-Cola in May and quickly set about transforming the company with a view to more resilient growth, including shaking up his management team earlier in the year.

In October, Coca-Cola North America president Sandy Douglas announced he would retire as the company neared completion on a decade-long refranchising effort for its North American business.


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