Will Coca-Cola make a move into alcohol?

An analyst from financial services company Wells Fargo has speculated that drinks giant Coca-Cola may announce plans to move into the alcoholic beverages market at its investor day on Thursday.

Wells Fargo has announced that it has upgraded Cola-Cola from ‘market perform’ to ‘outperform’ and has raised its 12-month price target for the company from $45 to $51.

Analyst Bonnie Herzog has said that Coca-Cola may announce plans to move into the alcoholic beverage market this Thursday at its investor day in Atlanta.

“We expect management will highlight a lot of this innovation,” said Herzog on Monday, continuing that she expects CEO James Quincey’s commentary to reveal more details on whether the company plans “to expand into other premium segments such as adult craft beverages” and whether this will include alcohol or just mixers.

In 2014, Coca-Cola took a 16.7% stake in energy drinks brand Monster, having also bought Keurig Green Mountain in the same year.

It has a market value of US$199.6 billion, making it the world’s largest non-alcoholic beverage maker. In comparison, AB InBev is the world’s largest brewer and has a market value of US$197.2 billion.

The beer giant has experienced a fall in sales of its flagship beer brands Budweiser and Bud Light and has recently announced a number of executive leadership changes in its North American division.

Herzog added: “We continue to believe Coca-Cola’s best-in-class distribution and strong brand portfolio will allow it to retain its premium valuation and believe that investments in productivity and marketing today will pay off in years to come. We think Coca-Cola can support roughly 5 to 6 percent organic revenue growth over the next several years, ahead of current consensus estimates.”

“With a new reinvigorated management team, and renewed focus on accelerating top-line growth while maintaining discipline around costs, we believe Coca-Cola’s next chapter of growth is around the corner”.

Coca-Cola rose 1.5% to 47.43 in Tuesday’s (14/11/2017) stock market trading.