Many consumer staples companies have long dividend growth histories, The Coca Cola Company (KO) is one of them. As one of the Dividend Kings — companies that have raised their dividend for at least 50 years in a row — the company’s shares are beloved by many income focused retail investors.

Due to changes in its business structure and due to changes in the beverages industry over the recent past its growth rate has come down over the last couple of years. A juicy dividend yield and low vulnerability towards an economic downturn still make Coca Cola a solid pick for risk-averse investors.

Business Overview

Coca Cola is one of the biggest beverage companies in the world. With a market capitalization of $184 billion Coca Cola is a giant in the consumer goods industry. Over the decades the company has established a global presence and is currently serving customers in almost every country of the world.

Source: Coca Cola presentation

The company has a portfolio spanning 21 brands which gross more than $1 billion in annual sales. On top of that Coca Cola has many more brands that produce a lower amount of annual sales. Unlike PepsiCo (PEP), Coca Cola is only selling beverages, where it has a bigger market share than its rival.

Over the last couple of years Coca Cola’s revenues have declined substantially, which can be explained by two factors: Currency rates (a strong dollar) hurt the company’s top line, as a big portion of Coca Cola’s sales are generated internationally. The bigger portion of the sales decline can be explained by Coca Cola’s re-franchising efforts, though.

The company is not bottling the products it sells themselves any longer, but cooperates with a huge amount of local partners. Over the last ten years Coca Cola has re-franchised the bottling operations in the US to 70 partners. Since some of the value creation does now happen at these partners, Coca Cola’s revenues have declined over that time frame. Coca Cola’s costs went down as well (the company does not operate any bottling facilities any longer), thus the negative impact on Coca Cola’s earnings wasn’t too big.

Growth Prospects

Coca Cola has been a high growth company for decades, but its growth rate has somewhat slowed down in the more recent past. This is not a big surprise, as much of Coca Cola’s growth has been fueled by geographic expansion in the past. As the company is now selling its products in almost every country, it has become much harder to increase the customer count further.