The Coca-Cola Co.

The stable outlook reflects our expectation that the company will strengthen credit measures over the next year--which have temporarily deteriorated including adjusted leverage around 3x--following the Costa acquisition, which closed in early 2019. We assume Coke will continue to generate substantial FOCF to fund its large dividend and offset currency headwinds via organic growth initiatives such that adjusted EBITDA strengthens by a low-single-digit percentage rate annually and adjusted leverage improves to the mid-to-high-2x area over the next 12-24 months. We could lower the rating if Coke's financial policies remain more aggressive than we expect, resulting in adjusted debt to EBITDA sustained above 3x. This could result if Coke makes more debt-financed acquisitions, increases share-repurchase activity, or faces profit headwinds, potentially

...Coke's strong brands and global reach in the non-alcoholic-beverage category are key credit strengths.Strong brand awareness continues to contribute to The Coca-Cola Co.'s (Coke's) leading global market shares, especially in CSD, where the company's brands hold over a 50% retail share. Coke also holds leading positions in other, much more fragmented, subsectors of the non-alcoholic-beverage category, including juice, dairy, and plant-based drinks (about 10%); water and sports drinks (about 15%); and tea and coffee (about 15%). Coke also competes in energy drinks, mainly through its minority investment in Monster Beverage Corp. and recently with its launch of Coke Energy, which is still very small. Key to the company's business-risk profile are the benefits from its broad portfolio of well-known brands, some of which are worth at least $1 billion, including Coca-Cola, which is the fourth most valuable brand globally according to Interbrand. Coke completed its North American bottler refranchising...

Full Report