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Coca-Cola & Vitamin water. Agenda. Financial & Accounting Highlights Valuation Marketing Analysis Recommendations. Recommendations. Continue Innovative Promotions Increase Frequency of Consumption Broaden Portfolio to Functional Foods Expand Globally (Brazil, Thailand and Vietnam).

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Presentation Transcript
agenda
Agenda
  • Financial & Accounting Highlights
  • Valuation
  • Marketing Analysis
  • Recommendations
recommendations
Recommendations

Continue Innovative Promotions

Increase Frequency of Consumption

Broaden Portfolio to Functional Foods

Expand Globally (Brazil, Thailand and Vietnam)

agenda4
Agenda
  • Financial & Accounting Highlights
  • Valuation
  • Marketing Analysis
  • Recommendations
accounting highlights
Accounting Highlights

?

  • Coca-Cola does not break out results for Vitaminwater
  • FIFO or average cost to value inventories
  • Does not disclose R&D

Vitamin

accounting highlights6
Accounting Highlights
  • $9B in cash
  • Advertising 10% of revenues
  • Dramatic Increases in Treasury Stock
  • $2B Vitaminwater Goodwill (increase from $1.4B prior to acquisition)

Vitamin

coke s stock price ltm
Coke’s Stock Price - LTM

Current Price: (12/11/2009): $59.11

52 Week High/Low: ($37.44/$59.40)

Average Daily Trading Volume: 10.2 M Shares

Vitamin

agenda8
Agenda
  • Financial & Accounting Highlights
  • Valuation
  • Marketing Analysis
  • Recommendations
free cash flow assumptions
Free Cash Flow - Assumptions

Revenue Growth Regression

(KO v. Nominal GDP)

Key Cash Flow Drivers:

Vitamin

free cash flow assumptions10
Free Cash Flow - Assumptions

Key Cash Flow Drivers:

Revenue Growth Regression (KO v. Nominal GDP)

EBIT Margin: 27.1% across all Cases

Vitamin

Change in Working Cap: held constant in all cases

Capital Expenditures

Depreciation and Amortization

valuation baseline
Valuation - Baseline

Vitamin

EV/EBITDA Multiple: 13.0X, 15.0X, 17.0X

Stock Valuation Range:

$55.24 - $74.84

Projected Stock Valuation: $64.71 / share

WACC 6.96%

valuation bull and bear
Valuation – Bull and Bear
  • Bull Case
  • Bear Case

Stock Valuation Range:

$61.57 - $75.44

Projected Stock Valuation: $68.50 / share

EV/EBITDA Multiple: 13.0X, 15.0X, 17.0X

WACC 6.96%

Vitamin

Stock Valuation Range:

$54.77 - $67.02

EV/EBITDA Multiple: 13.0X, 15.0X, 17.0X

Projected Stock Valuation: $60.89 / share

WACC 6.96%

agenda15
Agenda
  • Financial & Accounting Highlights
  • Valuation
  • Marketing Analysis
  • Recommendations
slide17

Competitor Analysis

  • New Products
  • Healthier Attributes
  • Higher Quantity of Healthy Attributes

New Entrants

  • Private Label
  • Homemade juices
  • Infused water

Primary

Industry Competitors

Suppliers

Customers

Substitutes

Secondary and Tertiary Competitors

slide18

Competitors

Sobe Life Water

Propel

Function

Industry

Primary

Snapple

Gatorade

Iced Tea

Flavored Water & Sparkling Water

SubstitutesPrimary

Soda

Water & Sparkling Water

Sobe, Fuze,

Snapple, etc

Substitutes

Secondary

Tea & Coffee

Milk

Powdered Drinks & Mixers

slide19

Competitor Analysis

Price

Lower

Higher

Flavor Variety

More

Less

slide20

Competitor Analysis

Brand Signals Health Benefits

Does Not

Does

Overall Nutritional Value

Higher

Lower

Tastes Less Like Water

Less

More

product positioning
Product Positioning
  • Positioned as a drink that both hydrates consumers while providing essential nutrients they are likely missing
customer needs hierarchy
Customer Needs Hierarchy
  • Better Healthier Person
  • Healthy
  • Energized
  • Refreshed
  • Energy

Alternative Beverage

  • Hydration
  • Nourishment
  • Taste
  • Vitamin Content

Nutrients

  • Water

Sugar

agenda23
Agenda
  • Financial & Accounting Highlights
  • Valuation
  • Marketing Analysis
  • Recommendations
continue innovative promotions
ContinueInnovative Promotions
  • Lebronvs. Kobe
  • Facebookflavorcreator
  • New Moon collaboration

Other Media

Print

increase frequency of consumption
Increase Frequency of Consumption
  • 33% of functional beverage consumers consume on daily basis
  • Increase availability of larger package sizes
  • Introduce new package sizes
increase frequency of consumption28
Increase Frequency of Consumption
  • Capture Consumers From Soda Category
health wellness awareness
Health & WellnessAwareness

65% of consumers want eat healthy

Functional Water Fills The Gap

Obesity On The Rise

consumer buying behavior changed
Consumer Buying Behavior Changed
  • Sales of functional foods in supermarket grew 18% over 2004 to 2009
functional foods
Functional Foods

Refuel

mixed berry

snacks

**************************************************************************************************************************************************************************

Vitamin

global market share
Global Market Share

Global Water Market Share

global recommendations
Global Recommendations

Brazil

Thailand

&

Vietnam

competitor analysis
Competitor Analysis

Price & Variety

  • Averages among all competitors

Nutritional Value

  • Each competitor was scored by various nutritional components
  • Weighted average score was calculated for each competitor to identify overall ranking
taste test results
Taste Test Results

Scale

  • 1 Tastes Least Like Water
  • 5 Tastes Most Like Water

Vitaminwater Statistics

  • Sample Average 2.94
  • Sample Std Dev 1.56
  • Sample Size 33
  • α = 0.05
  • Confidence interval 2.39 to 3.49
  • 95% confident that we are in the top 4
signaling health benefits results
Signaling Health Benefits Results

Scale

  • 1 Does Not Signal Health Benefits
  • 5 Signals Health Benefits

Vitaminwater Statistics

  • Sample Average 3.97
  • Sample Std Dev 1.22
  • Sample Size 35
  • α = 0.05
  • Confidence interval 3.55 to 4.39
  • 95% confident that VW is the leading brand signaling health benefits