Following Mayor Bloomberg’s announcement of new soda regulations, locals have reacted both in favor of the health-forward policies and against the infringement upon civil liberties. What have not received nearly as much attention are the obvious financial implications of these policies for the manufacturers involved.
The major soda companies in the United States, The Coco Cola Company (KO), PepsiCo, Inc. (PEP), and Dr Pepper Snapple Group, Inc. (DPS), are all planning public relations campaigns against the mayor’s decree. Additionally, those companies in tandem with the industry’s leading lobbying group, the American Beverage Association are considering taking legal or legislative action. The new city policy coupled with already declining sales could prove to be a major threat to the profit margins of these firms.
Corn Syrup
One method to combat these restrictions soft-drink companies may consider is changing the ingredients in its products. High fructose corn syrup, the sweet additive that makes these popular drinks so flavorful and addictive for many consumers, has received public scrutiny lately and been portrayed as a detriment to public health.
Leading producers of the ingredient face the challenge of proving to consumers that its products are not harmful and to soda manufacturers that their ingredient’s can contribute to positive sales growth moving forward.
Business Section: Investment Ideas
Whether or not these new policies are effective in reducing soda consumption, they will at least place in the public consciousness an awareness of the potential downsides of consuming soda and its most harmful ingredients. This poses a significant public image and sales obstacle the aforementioned companies.
How do you think the public will react? We have compiled a list of the companies that are most likely to be affected by New York City’s new policies and worth keeping an eye on.
Interactive Chart: Use the Compar-O-Matic to compare market caps for the stocks mentioned below:
1. The Coca-Cola Company (KO, Earnings, Analysts, Financials): Distributes, and markets nonalcoholic beverages worldwide. Market cap at $168.43B, most recent closing price at $74.66.
2. PepsiCo, Inc. (PEP, Earnings, Analysts, Financials): Engages in the manufacture, marketing, and sale of foods, snacks, and carbonated and non-carbonated beverages worldwide. Market cap at $106.43B, most recent closing price at $68.05.
3. Dr Pepper Snapple Group, Inc. (DPS, Earnings, Analysts, Financials): Engages in the manufacture and distribution of non-alcoholic beverages in the United States, Canada, and Mexico. Market cap at $8.99B, most recent closing price at $42.45.
4. Corn Products International Inc. (CPO, Earnings, Analysts, Financials): Together with its subsidiaries, manufactures and sells various ingredients to food and industrial customers in North America, South America, Asia, Africa, and Europe. Market cap at $3.82B, most recent closing price at $50.05.
(Written by Dan Connelly)
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- The Coca-Cola Company (KO, Chart, Download SEC Filings)
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- Dr Pepper Snapple Group, Inc. (DPS, Chart, Download SEC Filings)
- Corn Products International Inc. (CPO, Chart, Download SEC Filings)
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