Coca-Cola (KO) Stock: Ditching Bottling Could Be a Fizzy Win for Investors

Coca-Cola''s syrup-and-licensing model prints money—so why bother with the capital-intensive headache of bottling? Wall Street''s thirst for asset-light margins might finally force KO''s hand.

The Bottleneck in the Bottling Biz

KO''s vertical integration made sense last century. Now? It drags down ROIC and ties up billions in low-margin infrastructure—while Pepsi already pivoted to a franchise model. Analysts whisper ''spinoff'' like it''s a forbidden mantra.

Fizz vs. Fundamentals

The math is brutal: bottling operations chew up 30% of revenue but deliver single-digit operating margins. Meanwhile, the concentrate business quietly rakes in 50%+ margins. Even crypto bros understand that arbitrage.

The Bitter Aftertaste

Of course, KO''s execs will cling to ''operational synergies'' until the last shareholder revolt. Because nothing says ''innovation'' like a 138-year-old company pretending it''s still 1920. One well-timed activist investor could turn this soda jerk into a lean, mean, syrup-slinging machine.

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The latest Coca-Cola layoffs include 135 jobs that were cut in Napa County, Calif. The soda Maker has closed this 30-year-old plant as part of its strategic change away from bottling its own products. When Coca-Cola’s plan is complete, 80% of its bottling will be outsourced to other companies.

It makes sense that Coca-Cola WOULD seek to reduce its bottling and outsource the process. Doing so makes the company more asset-light and allows it to focus on its syrup margins of 68%. For comparison, the margins for bottling are only 12%. Offloading those less profitable operations could help boost KO stock.

KO Stock Analyst Coverage

Analysts largely agree with this mentality, with continued praise for KO stock. That includes updates from two analysts earlier this week:

• Five-star Morgan Stanley analyst Dara Mohsenian reiterated a Buy rating and an $81 price target, suggesting a 12.17% upside.
• RBC Capital analyst Nik Modi maintained a Buy rating and a $76 price target, implying a 5.25% upside.

KO stock was up 0.64% as of Tuesday morning. That builds on its 16.88% increase year-to-date and its 12.93% rally over the past 12 months.

Is KO Stock a Buy, Sell, or Hold?

Turning to Wall Street, the analysts’ consensus rating for Coca-Cola is Strong Buy, based on 15 Buy ratings and a single Hold rating over the past three months. With that comes an average KO stock price target of $79.50, representing a potential 10.08% upside for the shares.