Coca-Cola European Partners Versus Coca-Cola: Which Is Better?

Coca-Cola (KO) is the undisputed leader in the global beverage market.

Over time, Coca-Cola has grown to be a massive business. Their $178 billion market capitalization, 130 year operating history, and 3,800+ worldwide product base can attest to this.

Their business strength is also evident in their dividend history. With 54 years of consecutive dividend increases, Coca-Cola is a Dividend King – a group of elite companies with 50+ years of consecutive dividend increases. You can see the complete list of Dividend Kings here.

Coca-Cola has outsourced many of their bottling operations. These bottlers are influenced by many of the same industry dynamics as KO, and many have been rewarding investments over the years.

For instance, Coca-Cola European Partners (CCE) [previously called Coca-Cola Enterprises] has crushed the S&P 500 over the long-run and even outperformed KO.

Long Term Total Returns

Source: Yahoo! Finance

This post will compare the investment prospects of KO and CCE in detail.

Business Overview

While operating in the same industry, CCE and KO have fundamentally different business models.

KO is the original Coca-Cola company – they are responsible for manufacturing and distributing the company’s syrups and concentrates. KO also owns select bottling assets, which they called their Bottling Investment Group [BIG], but the company is divesting most of these assets over the course of fiscal 2017.

Post-Transformation

Source: Coca-Cola Investor Presentation, Barclays Global Consumer Staples Conference, slide 11

CCE’s business model is reliant on KO’s, but fundamentally different. CCE makes their money by purchasing the syrups and concentrates from Coca-Cola, diluting them with water, bottling the resulting soda, and distributing it to the public.

While there are many Coca-Cola bottling companies across the globe, CCE is the largest based on net sales.

This makes them a major player in the European Consumer Packaged Goods [CPG] industry, and allows them to align their business with the Coca-Cola Company [TCCC] in a way that none of their competitors can.

Major European CPG Company

Source: CCE Investor Presentation

Growth Prospects

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