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QuestionsCategory: Business QuadrantCoca cola business model flow chart
Benjamin Sing asked 3 months ago

Hi!
 
Just trying my hand at drawing business model flow chart.
I noticed in the 10-k the company gives brief breakdown for concentrate vs bottling segments.
But more detailed data is available in terms of Geography, Bottling Investment and Global Ventures. So I tried to reflect which segment comes from which revenue stream.
I also tried to determine which revenue is recurring. Can I check my understanding?

  1. I felt that those by geography are recurring.
  2. “Global ventures” initially I thought was recurring as people will continuously go to Costa to buy coffee or upgrade their Costa machine at home, but I noticed they made a loss in 2020 and overall their margins are less than the concentrate segment (reflected by geography).
  3. For bottling investments, my understanding is that Coca-cola buys over bottling companies that are not doing well and try to turn them around, using their know how and economies of scale to compensate for lack of expertise and resources, following which they sell off the company while retaining an equity stake. I don’t think this is a consistent source of revenue, because who knows how the investment may turn out? But the segment seems to be profitable in past 3 years (5-7% margin).
1 Answers
Victor Chng answered 3 months ago

Hi Benjamin,
 

  1. Beverage businesses are usually recurring. KO breakdown the business segment in terms of geography. Hence, you are correct that it is recurring. 
  2. Global venture is a small segment. Refer to page 41 of the 10-K filing; it only accounts for 2.8% of operating profit.  
  3. This segment is not their core business. Hence I will not treat it as a growth driver. 

 
Great drawing on the business model flow chart. You have summarised their business on a piece of paper. Keep it up :)