The Coca-Cola Company flexes its muscle

The Coca-Cola Company said it would continue to make acquisitions, but they were not necessary for the world’s largest soft drink maker to meet its long-term growth objectives.

Coca-Cola reiterated its long-term targets so that everybody could take note: it would increase its annual sales volume by 3 percent to 4 percent, revenue by 5 percent to 6 percent, operating income by 6 percent to 8 percent and earnings-per-share by a high single-digit percentage rate. Got it?

Those targets did not include acquisitions, Coke’s Chief Financial Officer Gary Fayard was quoted as saying at a conference in Florida hosted by the Consumer Analyst Group of New York in February.

Coke would continue to do bolt-on acquisitions but they were not included in the growth model. To be successful, for Coca-Cola meant to reach its self-set targets by growing existing businesses.

Chief Operating Officer Muhtar Kent, who will soon become Chief Executive Officer, put it more succinctly: “Organic growth is the oxygen of our business.”

Kent also said that acquisitions would have to be done in a disciplined manner.

Taking a sideswipe at his predecessors, Kent added that the company was looking at fewer, but more important brands, than in the past.

Coca-Cola has benefited from its recent acquisitions of FUZE teas and Glaceau vitamin water, which have boosted sales at a time when its traditional carbonated soft drinks, including Coca-Cola, Diet Coke and Sprite, were experiencing sluggish U.S. sales.

The Coca-Cola Company (U.S. Dollar)

Coca-Cola’s share price has not been affected as badly by the surge in commodity prices as the brewers’. Source: Reuters.com