Over the past five years, Coca-Cola has been gaining an enormous competitive advantage of its peers. And it does not involve the sale and manufacture of the syrup concentrates for which it is famous. Instead, Coca-Cola has been getting stronger over the past five or so years by entering into distribution arrangements around the world with Dr. Pepper Group, Anheuser-Busch Inbev, Mondelez, and over 300+ regional producers of soda.
It is a story that involves everyone’s favorite topic: asset-intensive business models and the earnings that are reported to investors. Over the past few years, perhaps fueled by the rise of companies like Microsoft and Visa that can grow earnings very quickly due to a fixed-up cost business model that has very little cost for each additional consumer, it seems that every business has been trying to become less asset-intensive than it used to be.
As a consequence, most beverage companies … Read the rest of this article!