How Coca-Cola Makes Money

Syrup and finished product sales make up the bulk of revenue

By NATHAN BUEHLER Updated June 28, 2023

Reviewed by JEFREDA R. BROWN
The Coca-Cola Company's (KO) distribution model is an integral part of its success.
Its unique business model has served the company well since bottling first began in
1894. John Stith Pemberton, a pharmacist living in Atlanta, created the flagship
soda, Coca-Cola, in 1886.1

The company has operated under a franchise distribution model since 1889 and was
incorporated in 1892. Coca-Cola has risen to global prominence and is the largest
nonalcoholic beverage company in the world.21
In 1894, Mississippi businessman Joseph Biedenharn installed bottling machinery
behind his soda fountain store. He did this in order to make Coca-Cola much more
portable. Five years later, three entrepreneurs in Tennessee purchased the
exclusive rights to bottle and sell Coca-Cola for $1.3

This posed many problems for the company, from limitations by competitors and
the need for consistency across the product line. In 1916, Coca-Cola bottlers agreed
on the iconic contour design bottle that still remains.

The Coca-Cola Company is considered the largest non-alcoholic beverage company

in the world, reaching consumers in more than 200 countries. It has roughly 200
master brands that are grouped into categories such as sparkling soft drinks, sports
drinks, juices, energy drinks, and tea and coffee. Some of the most popular brands
include Coca-Cola, Sprite, Fanta, Powerade, and Dasani.4

According to the company's website, it has approximately 950 production facilities

worldwide and about 200 bottling partners around the globe. The number of Coca-
Cola bottlers exploded to over 1,200 plants by 1920.56

So how does this global powerhouse make money? Keep reading to find out more
about the company's business model, its financial achievements, as well as its
business segments.
KEY TAKEAWAYS
The Coca-Cola Company is the largest non-alcoholic beverage company, reaching
more than 200 countries.
Coca-Cola neither completes nor bottles the majority of its products.
The company generates revenue by selling concentrates and syrups to bottling
facilities globally and by selling finished products to retailers and other distributors.
Coca-Cola has four geographic and two non-geographic business segments.
The company has a number of initiatives in place to address water quality,
packaging, climate change, and corporate diversity.
Coca-Cola’s Financials
Coca-Cola released its Q1 2023 results on April 24, 2023. The company reported
consolidated net operating revenue of $10.98 billion for the quarter. That's a 5%
increase from the same period the previous year. The primary driver in revenue
growth was an 11% increase in price/mix. Gross profits increased by 4% from the
same period, going from $6.40 billion to $6.67 billion.7

Coca-Cola was the world's most valuable non-alcoholic beverage in 2022.8

North America was the area that posted the highest revenue in the quarter, coming
in at about $3.90 billion. The company's Bottling Investments Group (BIG) reported
roughly $1.95 billion in revenue, and the company's Europe, Middle East, and Africa
division reported $2.02 billion in revenue.9

The bulk of the company's revenue is derived from its two key businesses—the
concentrate business and its finished product business.

Concentrate Business
Coca-Cola manufactures and sells syrup to authorized bottlers. These partners then
add water and carbonation to make and sell finished Coca-Cola products. This
division is referred to as the company's concentrate operations.

Coca-Cola has supported the consolidation occurring among its bottlers. That's
because having many small independent bottlers created several macro and
microeconomic challenges for the company. Smaller independent bottlers often lack
the financial assets to continue operations and fund investments when they're faced
with economic hurdles. This leads to financial troubles for Coca-Cola.

The company responded by creating its Bottling Investments Group. This group
identifies struggling franchisees, providing them with financial and institutional
support. The company sends experts and resources to drive growth and return the
franchise to profitability. Once they achieve profitability and stability, the company
finds a qualified bottler to assume operations.10

According to the company's website, BIG operates in parts of Africa, South Asia, and
Southeast Asia. It completed refranchising in Canada, the United States, Guatemala,
Uruguay, and China.11

Finished Product Business

The company also manufactures its own fountain syrups, manages several bottling
operations, and collects revenue on finished products. These operations fall under
Coca-Cola's finished product operations. This business segment is made up of both
company-owned or controlled operations in both sales and distribution. This
includes the sale of sparkling beverages and nonalcoholic drinks to retailers. They
are also sold to distributors and wholesalers who, in turn, sell them to retailers.6
Coca-Cola is a dominating force in the United States with almost 46% of the
country's carbonated soft drink market.12

Coca-Cola’s Business Segments

Coca-Cola operates business segments in four geographic areas and two non-
geographic ones:

North America: This is the flagship segment of the company. This market has a
value of $228 billion and approximately 320 million consumers.
Latin America: This market has approximately 520 million consumers who span 39
different markets that contribute a value of about $72 billion.
Europe, Middle East & Africa: Comprised of roughly 130 different markets, this
segment is valued at $254 billion, thanks to roughly 2 billion consumers.
Asia Pacific: This market has the most consumers, totaling 3.3 billion. A total of 37
markets contribute $308 billion in value.
Bottling Investment Group (BIG): This group was formed in 2006. As noted above,
this division is responsible for ensuring that bottling operations get the investments
they need to succeed.
Global Ventures (GV): The division was created in Jan. 2019 to oversee acquisitions
and to integrate brands into the company.13
Coca-Cola’s Recent Developments
The company has several initiatives in place according to the company's website.
The following are some of the key initiatives in place:

Water leadership: Water is an integral part of Coca-Cola's business. This is why the
company considers water quality as an important part of its production. It is also
committed to using water efficiently, replenishing the water it uses, and treating the
wastewater produced. By 2030, the company wants to achieve 100% regenerative
water use across 175 facilities identified as facing high levels of water stress.
Packaging The company is taking steps to make 100% of its packaging recyclable
globally by 2025 and to use at least 50% recycled content in their packaging by
2030. By 2030, the company also seeks to have at least 25% of its beverages
worldwide by volume sold in refillable/ returnable glass, plastic bottles, or in
fountain dispensers with reusable packaging.
People and communities: Coca-Cola's mission is for the company to emulate the
diversity of its consumer market. It aims to have women represent 50% of its
leadership on a global scale and for its U.S. employee base to correspond to census
data in terms of race and ethnicity by 2030.
Climate: By 2030, the company aims to reduce absolute emissions by 25% against
a 2015 baseline. It seeks net zero emissions by 2050.14
The Coca-Cola Company. "The Coca-Cola Company 2022 Business & Sustainability
Report."