The Coca-Cola Company

Company Overview

Business Model: The Coca-Cola Company is a total beverage company that owns or licenses and markets numerous beverage brands across categories including Trademark Coca-Cola; sparkling flavors; water, sports, coffee and tea; juice, value-added dairy and plant-based beverages; and emerging beverages. The Company operates in two primary lines of business: concentrate operations and finished product operations. Concentrate operations typically generate net operating revenues by selling beverage concentrates, syrups, and certain finished beverages to authorized bottling partners. Finished product operations generate net operating revenues by selling sparkling soft drinks and a variety of other finished beverages to retailers, or to distributors and wholesalers, primarily through its consolidated bottling and distribution operations. The Company also sells directly to consumers through retail stores operated by Costa Limited.

Market Position: The Coca-Cola Company's products are sold in more than 200 countries and territories, with beverages bearing its trademarks accounting for 2.2 billion of the estimated 65 billion servings of all beverages consumed worldwide daily. Key competitive strengths include leading brands with high consumer recognition and loyalty, a worldwide network of bottlers and distributors, sophisticated marketing capabilities, and a talented employee base. The Company owns and markets several of the world’s largest nonalcoholic sparkling soft drink brands, including Coca-Cola, Sprite, Coca-Cola Zero Sugar, Fanta, and Diet Coke/Coca-Cola Light. Sparkling soft drinks represented 69% of worldwide unit case volume in both 2024 and 2023, with Trademark Coca-Cola accounting for 47% in both years. The Company has also directly entered the alcohol beverage category in numerous markets outside the United States, focusing on pre-mixed cocktails, flavored alcohol beverages, and hard seltzers.

Recent Strategic Developments:

• Operating Structure Streamlining: In November 2024, The Coca-Cola Company announced plans to sunset its Global Ventures operating segment, effective January 1, 2025. The Costa (excluding the ready-to-drink business), innocent, and doğadan businesses will report to the Europe, Middle East and Africa operating segment, while Costa’s ready-to-drink business and the fees related to Monster Beverage Corporation will be managed by the respective geographic operating segments.
• Refranchising Activities: In January 2023, the Company refranchised its bottling operations in Vietnam. In January, February, and December 2024, it refranchised bottling operations in certain territories in India, and in February 2024, refranchised operations in Bangladesh and the Philippines.
• Brand Acquisitions: In May 2023, the Company acquired certain brands in Asia Pacific.
• Productivity and Reinvestment Program: The Company continues its productivity and reinvestment program, initiated in February 2012 and expanded in April 2017, aimed at strengthening brands and driving long-term profitable growth through organizational simplification and standardization, with certain initiatives to be completed in 2025.
• Digital Transformation: The Company is prioritizing digitalization of the Coca-Cola system to enhance consumer and customer experiences, create powerful digital tools for retail customers, and digitalize operations for efficiency using data, artificial intelligence, automation, robotics, and digital devices.

Geographic Footprint: The Coca-Cola Company operates in more than 200 countries and territories. Its operating segments include Europe, Middle East and Africa; Latin America; North America; and Asia Pacific. In 2024, 84% of worldwide unit case volume was generated outside the United States. The countries outside the United States with the largest unit case volumes were Mexico, China, Brazil, and India, which together accounted for 33% of worldwide unit case volume. The Company's worldwide headquarters is located in Atlanta, Georgia, United States.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 61.1% (2024), 59.5% (2023)
• Operating Margin: 21.2% (2024), 24.7% (2023)
• Net Margin: 22.6% (2024), 23.4% (2023)

Investment in Growth:

• R&D Expenditure: Not explicitly disclosed as a separate line item.
• Capital Expenditures: $2.06 billion (2024), $1.85 billion (2023)
• Strategic Investments:
  • In 2024, The Coca-Cola Company invested $226 million in alternative energy limited partnerships.
  • Acquisitions of businesses, equity method investments, and nonmarketable securities totaled $315 million in 2024 and $62 million in 2023.

Business Segment Analysis

Europe, Middle East and Africa

Financial Performance:

• Revenue: $8.12 billion (2024), $8.08 billion (2023) (+1% YoY)
• Operating Margin: 55.4% (2024), 56.8% (2023)
• Key Growth Drivers: Favorable pricing initiatives, including inflationary pricing in Türkiye and Zimbabwe, and favorable geographic mix, partially offset by increased funding for promotional and marketing support.
• Key Performance Detractors: A decline in concentrate sales volume of 1%, higher commodity costs, increased marketing spending, higher operating expenses, and an unfavorable foreign currency exchange rate impact of 15%.

Product Portfolio:

• Unit case volume was even in 2024, which included 4% growth in water, sports, coffee and tea, offset by a 1% decline in Trademark Coca-Cola and a 5% decline in juice, value-added dairy and plant-based beverages. Unit case volume in sparkling flavors was even.

Market Dynamics:

• The operating segment reported growth in unit case volume of 2% in the Africa operating unit, offset by a decline of 2% in the Eurasia and Middle East operating unit. Unit case volume performance in the Europe operating unit was even.

Latin America

Financial Performance:

• Revenue: $6.46 billion (2024), $5.83 billion (2023) (+11% YoY)
• Operating Margin: 58.5% (2024), 58.9% (2023)
• Key Growth Drivers: Concentrate sales volume growth of 3% and favorable pricing initiatives, including inflationary pricing in Argentina, partially offset by increased funding for promotional and marketing support.
• Key Performance Detractors: Higher commodity costs, increased marketing spending, higher operating expenses, higher other operating charges (including a $126 million trademark impairment), and an unfavorable foreign currency exchange rate impact of 17%.

Product Portfolio:

• Unit case volume increased 3% in 2024, which included 5% growth in Trademark Coca-Cola and 2% growth in water, sports, coffee and tea, partially offset by a 1% decline in sparkling flavors. Unit case volume in juice, value-added dairy and plant-based beverages was even.

Market Dynamics:

• The operating segment’s volume performance included 8% growth in Brazil and 2% growth in Mexico, partially offset by a decline of 12% in Argentina.

North America

Financial Performance:

• Revenue: $18.65 billion (2024), $16.77 billion (2023) (+11% YoY)
• Operating Margin: 23.3% (2024), 26.4% (2023)
• Key Growth Drivers: Concentrate sales volume growth of 1% and favorable pricing initiatives and package and category mix.
• Key Performance Detractors: Higher commodity costs, increased marketing spending, higher operating expenses, higher other operating charges (including a $760 million impairment of the BodyArmor trademark and $19 million for the restructuring of manufacturing operations), and unfavorable channel mix and increased funding for promotional and marketing support.

Product Portfolio:

• Unit case volume was even in 2024, which included 3% growth in juice, value-added dairy and plant-based beverages and 1% growth in both Trademark Coca-Cola and sparkling flavors, offset by a 4% decline in water, sports, coffee and tea.

Market Dynamics:

• In 2024, the United States represented 16% of The Coca-Cola Company’s worldwide unit case volume, of which 61% was attributable to sparkling soft drinks and 42% to Trademark Coca-Cola.

Asia Pacific

Financial Performance:

• Revenue: $5.55 billion (2024), $5.46 billion (2023) (+2% YoY)
• Operating Margin: 42.3% (2024), 43.2% (2023)
• Key Growth Drivers: Concentrate sales volume growth of 2%, favorable pricing initiatives, lower other operating charges, and the impact of acquired brands and structural changes.
• Key Performance Detractors: Higher commodity costs and an unfavorable foreign currency exchange rate impact of 2%.

Product Portfolio:

• Unit case volume increased 1% in 2024, which included 4% growth in sparkling flavors and 3% growth in Trademark Coca-Cola, partially offset by a 4% decline in water, sports, coffee and tea. Unit case volume in juice, value-added dairy and plant-based beverages was even.

Market Dynamics:

• The operating segment reported growth in unit case volume of 7% in the India and Southwest Asia operating unit and 4% in both the ASEAN and South Pacific and the Japan and South Korea operating units, partially offset by a decline of 5% in the Greater China and Mongolia operating unit.
• The countries outside the United States in which unit case volumes were the largest were Mexico, China, Brazil, and India, which together accounted for 33% of worldwide unit case volume.

Global Ventures

Financial Performance:

• Revenue: $3.13 billion (2024), $3.06 billion (2023) (+2% YoY)
• Operating Margin: 11.5% (2024), 10.7% (2023)
• Key Growth Drivers: Concentrate sales volume growth of 4%, lower commodity costs, and a favorable foreign currency exchange rate impact of 1%.
• Key Performance Detractors: Unfavorable product mix, increased marketing spending, and higher operating expenses.

Product Portfolio:

• Unit case volume increased 2% in 2024, driven by growth in energy drinks, partially offset by a 6% decline in water, sports, coffee and tea. Unit case volume in juice, value-added dairy and plant-based beverages was even.
• Major product lines include Costa, innocent, and doğadan.

Market Dynamics:

• The segment oversees The Coca-Cola Company’s ownership of Costa, innocent, and doğadan, as well as fees earned pursuant to distribution coordination agreements between the Company and Monster Beverage Corporation.
• Effective January 1, 2025, this segment will be sunset, with its businesses integrated into geographic operating segments.

Bottling Investments

Financial Performance:

• Revenue: $6.22 billion (2024), $7.86 billion (2023) (-21% YoY)
• Operating Margin: 8.0% (2024), 7.4% (2023)
• Key Growth Drivers: Unit case volume growth of 5% (after considering structural changes) and favorable pricing initiatives.
• Key Performance Detractors: Primarily driven by the impact of refranchising bottling operations in the Philippines, Bangladesh, and certain territories in India, higher commodity costs, increased marketing spending, higher operating expenses, and an unfavorable foreign currency exchange rate impact of 1%.

Product Portfolio:

• Unit case volume decreased 23% in 2024, which primarily reflects the impact of refranchising bottling operations in the Philippines, Bangladesh, and certain territories in India.

Market Dynamics:

• This segment includes all consolidated bottling operations, regardless of geographic location.
• The Coca-Cola Company periodically considers options for divesting or reducing its ownership interest in a consolidated bottling operation, typically by selling all or a portion of its interest to an independent bottler to improve Coca-Cola system efficiency.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $1.80 billion (26.5 million shares) in 2024, $2.29 billion (36.9 million shares) in 2023. The Company repurchased shares under the 2019 Plan, which authorized up to 150 million shares. As of December 31, 2024, 76,349,979 shares remained available under the 2019 Plan.
• Dividend Payments: $8.36 billion in 2024, $7.95 billion in 2023.
• Dividend Yield: Approximately 3.07% for 2024 (based on annualized common stock dividend of $1.94 per share and market value as of June 28, 2024).
• Future Capital Return Commitments: The Board of Directors increased the regular quarterly dividend to $0.51 per share in February 2025, equivalent to a full year dividend of $2.04 per share in 2025, marking the 63rd consecutive annual increase. The Company expects to repurchase shares in 2025 to offset dilution resulting from employee stock-based compensation plans.

Balance Sheet Position:

• Cash and Equivalents: $10.83 billion (2024), $9.37 billion (2023)
• Total Debt: $44.52 billion (2024), $42.06 billion (2023)
• Net Cash Position: -$33.69 billion (Net Debt) (2024), -$32.70 billion (Net Debt) (2023)
• Credit Rating: "A+" by Standard & Poor’s and "A1" by Moody’s for long-term debt. Commercial paper program rated "A-1" by Standard & Poor’s and "P-1" by Moody’s.
• Debt Maturity Profile:
  • 2025: $648 million
  • 2026-2027: $6.87 billion
  • 2028-2029: $5.47 billion
  • 2030 and Thereafter: $33.56 billion

Cash Flow Generation:

• Operating Cash Flow: $6.81 billion (2024), $11.60 billion (2023)
• Free Cash Flow: $4.74 billion (2024), $9.75 billion (2023)
• Cash Conversion Metrics: The Coca-Cola Company has a trade accounts receivable factoring program in certain countries, under which it sold $21.87 billion of trade accounts receivables in 2024 and $17.70 billion in 2023. The cash received from these sales is classified within operating activities.

Operational Excellence

Production & Service Model: The Coca-Cola Company operates in two lines of business: concentrate operations and finished product operations. Concentrate operations involve selling beverage concentrates, syrups, and certain finished beverages to authorized bottling partners. These partners then combine concentrates with water and sweeteners to produce finished beverages, which are packaged and sold to retailers. Finished product operations involve selling sparkling soft drinks and a variety of other finished beverages directly to retailers, or to distributors and wholesalers, primarily via consolidated bottling and distribution operations. The Company also sells directly to consumers through retail stores operated by Costa. In the United States, the Company manufactures fountain syrups and sells them to fountain retailers or authorized fountain wholesalers/bottling partners.

Supply Chain Architecture: Key Suppliers & Partners:

• Nutritive Sweeteners: High fructose corn syrup (HFCS) from numerous domestic sources in the United States, and sucrose (table sugar) from numerous sources outside the United States. Coca-Cola Bottlers’ Sales & Services Company LLC assists in procuring HFCS for North American operations and U.S. and Canadian bottling partners.
• Non-Nutritive Sweeteners: Aspartame, acesulfame potassium, sucralose, saccharin, cyclamate, and steviol glycosides, generally available from numerous sources. Sucralose is considered a critical raw material sourced mainly from the United States and China.
• Juice & Juice Concentrates: Primarily orange juice and concentrate from Florida and the Southern Hemisphere (especially Brazil), with Cutrale Citrus Juices U.S.A., Inc. as a primary supplier.
• Dairy: Milk is the principal raw material for dairy products, sourced from dairy cooperatives for fairlife, LLC products.
• Coffee & Tea: Costa purchases Rainforest Alliance Certified and other certified green coffee through multiple suppliers. Tea is procured from a diverse supplier base.
• Packaging Materials: PET resin, preforms and bottles; glass and aluminum bottles; aluminum and steel cans; plastic closures; aseptic fiber packaging; labels; cartons; cases; postmix packaging; and beverage gases (carbon dioxide, liquid nitrogen). Aluminum cans are available from a limited number of suppliers.
• Water: A main ingredient in substantially all products, recognized as a limited natural resource with availability, quality, and sustainability as key challenges.

Facility Network:

• Worldwide Headquarters: Atlanta, Georgia, a 35-acre complex including office buildings, technical and engineering facilities, and a reception center.
• Manufacturing: As of December 31, 2024, the Company owned 30 and leased 1 principal concentrate and/or syrup plants, and owned 74 and leased 7 principal beverage manufacturing/bottling plants.
• Research & Development: Technical and engineering facilities are part of the worldwide headquarters complex.
• Distribution: As of December 31, 2024, the Company owned 63 and leased 157 principal distribution and storage facilities.
• Retail: As of December 31, 2024, the Company leased 1,526 principal retail stores (primarily Costa).
• Capacity: Management believes facilities are suitable, adequate, and appropriately utilized, with sufficient production capacity for present intended purposes. Additional production can be achieved by adding personnel and capital equipment or expanding facilities, with the exception of certain dairy products requiring specialized equipment. The Company is in the process of increasing dairy production capacity.

Operational Metrics:

• Unit Case Volume: 33.7 billion in 2024, up 1% from 33.3 billion in 2023.
• Concentrate Sales Volume: Grew 1% in 2024.
• Sparkling soft drinks represented 69% of worldwide unit case volume in both 2024 and 2023.
• Trademark Coca-Cola accounted for 47% of worldwide unit case volume in both 2024 and 2023.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Enterprise sales force, direct customer relationships with retailers, distributors, and wholesalers.
• Channel Partners: Network of independent bottling partners, distributors, and wholesalers.
• Digital Platforms: Increasing investments in e-commerce to support retail and meal delivery services, offering more package sizes that are fit-for-purpose for online sales, and shifting more consumer and trade promotions to digital.
• Retail Stores: Direct sales to consumers through retail stores operated by Costa.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: The five largest independent bottling partners based on unit case volume in 2024 were Coca-Cola FEMSA, S.A.B. de C.V., Coca-Cola Europacific Partners plc, Coca-Cola HBC AG, Arca Continental, S.A.B. de C.V., and Swire Coca-Cola Limited. These five bottling partners combined represented 44% of total worldwide unit case volume in 2024.
• Strategic Partnerships: The Company participates in sales of other beverage brands through licenses, joint ventures, and strategic relationships, such as with Monster Beverage Corporation.
• Customer Concentration: In many countries, the Company faces a concentrated retail sector with powerful buyers able to freely choose among Company products, competitive beverage suppliers, and individual retailers’ own store or private-label beverage brands.

Geographic Revenue Distribution:

• United States: 39.6% of total net operating revenues (2024)
• International: 60.4% of total net operating revenues (2024)
• Growth Markets: The Company's success depends in part on its ability to grow its business in emerging and developing markets.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The commercial beverage industry is highly competitive and consists of numerous companies, ranging from small or emerging to very large and well established. Competitive products include nonalcoholic sparkling soft drinks; water products; juices, juice drinks and nectars; dilutables; coffees; teas; energy drinks; sports drinks; milk and other dairy-based drinks; plant-based beverages; functional beverages; and alcohol ready-to-drink beverages. Competitive factors include pricing, advertising, sales promotion programs, in-store displays and point-of-sale marketing, digital marketing, product and ingredient innovation, availability, increased efficiency in production techniques, new packaging, new vending and dispensing equipment, contracting with marketing assets, and brand and trademark development and protection. The industry is also affected by consolidation in retail channels, rapid growth of discounters and value stores, and the rapid growth in sales through e-commerce.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• PepsiCo, Inc.: A primary competitor in many countries.
• Other Significant Competitors: Nestlé S.A., Keurig Dr Pepper Inc., Danone S.A., Suntory Beverage & Food Limited, Anheuser-Busch InBev, Kirin Holdings, Heineken N.V., Diageo plc, and Red Bull GmbH.
• Regional and Local Companies: Numerous regional and local companies.
• Emerging Competitors: Smaller companies developing microbrands and selling them directly to consumers through e-commerce retailers and other e-commerce platforms.
• Retailer Private-Label Brands: Retailers that have developed their own store or private-label beverage brands.

Emerging Competitive Threats: New entrants, disruptive technologies, and alternative solutions.

Competitive Response Strategy: The Coca-Cola Company aims to continuously strengthen its capabilities in marketing, data analytics (including artificial intelligence and machine learning), and innovation to understand and maintain consumer interest, brand loyalty, and market share. It strategically expands into other profitable categories of the commercial beverage industry, invests in innovative and sustainable packaging, and optimizes its portfolio of brands, products, and services.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Unfavorable Economic & Geopolitical Conditions: Global inflationary pressures, prevailing interest rates, credit market conditions, increased unemployment, commodity prices, trade policies, and foreign currency exchange rates can negatively impact the affordability of, and consumer demand for, products. International conflicts (e.g., Russia and Ukraine, Middle East) caused operational disruptions, logistical/transportation/supply chain disruptions, increased costs, and product boycotts in 2024.
• Increased Competition: Intense competition from global, regional, local, and private-label brands can lead to price reductions, increased marketing costs, and difficulty maintaining market share.
• Evolving Consumer Product Preferences: Shifts due to health, wellness, and nutrition considerations (obesity, caloric intake, artificial ingredients), environmental/social/sustainability impact, and digital shopping patterns can reduce demand for certain products.
• Changes in Retail Landscape: Consolidation in retail channels, rapid growth of discounters and value stores, and the rapid growth in e-commerce can lead to demands for lower prices, increased marketing expenditures, and the introduction of private-label brands.
• Emerging Market Expansion: Failure to expand business in emerging and developing markets due to economic and political conditions, necessary infrastructure enhancements, or scarcity of talented management and employees could negatively affect growth.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Supplier Dependency: Dependence on a limited number of suppliers for critical raw materials (e.g., sucralose, aluminum cans) or agricultural commodities (e.g., citrus, corn, sugar) creates risk of shortages and price volatility due to supply/demand changes, supplier capacity, international conflicts, weather (e.g., citrus greening disease), disease or pests, labor shortages, and trade restrictions.
• Increased Input Costs: Price volatility and fluctuations in availability of raw materials, packaging, energy, transportation, labor, and other supply chain inputs can increase costs. Attempts to offset through price increases may not be successful and could result in reductions in sales volume.
• Acquisition Integration: Challenges in successfully integrating the operations, technologies, services, products, and systems of acquired businesses, brands, or bottling operations can lead to unforeseen liabilities, increased costs, internal control or product quality failures, and failure to achieve anticipated benefits.
• Third-Party Service Providers: Reliance on third parties (cloud data storage, IT, suppliers, distributors, joint venture partners) for certain services exposes the Company to risks of non-fulfillment, adverse events, and lack of control over their business operations or governance and compliance systems.
• Labor Relations: Inability to renew collective bargaining agreements on satisfactory terms, or experiencing strikes, work stoppages, or labor unrest at major manufacturing facilities or bottling plants, could increase labor costs, impair supply, and damage reputation.

Financial & Regulatory Risks

Market & Financial Risks:

• Foreign Currency Exchange Rate Fluctuations: Exposure to currency fluctuations (e.g., U.S. dollar strengthening against Argentine peso, Nigerian naira, Zimbabwean dollar, Turkish lira, and Japanese yen) can adversely affect net operating revenues, operating income, and the value of balance sheet items denominated in foreign currencies.
• Interest Rate Increases: Higher interest rates can increase interest expense on variable-rate debt and borrowing costs, potentially reducing net income.
• Impairment Charges: Risk of significant impairment charges on noncurrent assets (trademarks, goodwill, equity method investments) if operating results and/or macroeconomic conditions deteriorate, as seen with the $760 million BodyArmor trademark impairment in 2024.
• Counterparty Default: Exposure to default by counterparty financial institutions in hedging activities or cash/investment deposits, especially during economic downturns and periods of uncertainty in financial markets.

Regulatory & Compliance Risks:

• Income Tax Disputes: Ongoing litigation with the United States Internal Revenue Service regarding transfer pricing for tax years 2007-2009, with a potential total liability of $6.0 billion (including interest) for that period, and an estimated aggregate remaining incremental tax and interest liability of approximately $12 billion for tax years 2010-2024 if the Tax Court Methodology is ultimately upheld. This could have a material adverse impact on the Company’s financial position, results of operations, and cash flows.
• Increased or New Indirect Taxes: Imposition or increase of indirect taxes (import duties, tariffs, excise taxes, sales or value-added taxes, taxes on sweetened or aerated beverages, packaging taxes, carbon taxes) could increase product costs and reduce demand.
• Beverage Container Regulations: Evolving laws and regulations relating to beverage container deposits, recycling, recycled content, and bans/restrictions on certain plastic products/packaging materials could increase costs and reduce demand for products.
• Product Labeling & Marketing Restrictions: Concerns about processing or the use of particular ingredients or additives (e.g., nutritive and non-nutritive sweeteners, color additives, PFAS) could lead to additional labeling or warning requirements or limitations on marketing/sale, inhibiting sales of affected products.
• Competition Law Scrutiny: Operations may come under special scrutiny by competition law authorities in many jurisdictions due to the Company's competitive position.
• Legal Proceedings: Exposure to various litigation claims and legal proceedings (advertising, product claims, competition, distribution and pricing, personal data protection and privacy, intellectual property, tax disputes, environmental, and employment matters) can result in significant liabilities and damage to reputation.
• High-Risk Legal Compliance Environments: Operating in markets with high-risk legal compliance environments exposes the Company to increased legal and reputational risk from improper payments to government officials or non-compliance with laws like the Foreign Corrupt Practices Act and trade sanctions.

Geopolitical & External Risks

Geopolitical Exposure:

• Geographic Dependencies: Unstable geopolitical conditions or events, including international conflicts, civil unrest, acts of war, and governmental changes, can lead to logistical, transportation, and supply chain disruptions; business disruptions; increased costs; and heightened security risks.
• Trade Relations: Changing policy positions, negotiation of new trade agreements, new/expanded/retaliatory tariffs, import authorization requirements, and other restrictions on business activities could impact profitability.
• Sanctions & Export Controls: U.S. trade sanctions against certain countries or financial institutions could make sales difficult or impossible, and retaliatory sanctions could negatively affect the business.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• New Noncaloric Sweeteners and Flavors: The Coca-Cola Company is committed to partnering with suppliers to invest in research and development of new noncaloric sweeteners and flavors to create the best tasting beverages, including options with low or no calories.
• Innovation Pipeline: Continuously seeks to evolve and improve existing beverage products and successfully develop, introduce, and market new beverage products to stimulate consumer demand and meet evolving preferences.
• Digital Capabilities: Focused on digitalizing operations through the use of data, artificial intelligence, automation, robotics, and digital devices to increase efficiency and productivity across the Coca-Cola system.

Intellectual Property Portfolio:

• Patent Strategy: The Company owns numerous patents related to beverage products and their production processes; packages and packaging materials; design and operation of processes and equipment; and certain software.
• Licensing Programs: Licenses some technology to suppliers and other parties. Authorizes bottlers and certain third parties to use applicable Company trademarks. Grants licenses to third parties to use certain trademarks in conjunction with merchandise and food products.
• Trade Secret Protection: Sparkling beverage and other beverage formulas are among the important trade secrets of The Coca-Cola Company.
• IP Litigation: Potential for conflicts with third parties over intellectual property rights, which could result in disruptive and expensive litigation.

Technology Partnerships:

• Strategic Alliances: Not explicitly detailed in the provided text beyond general supplier partnerships for R&D.
• Research Collaborations: Not explicitly detailed in the provided text.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The Corporate Governance and Sustainability Committee of the Board of Directors oversees succession planning and talent development for senior executives. All executive officers serve at the pleasure of the Board of Directors.

Board Composition: The Audit Committee of the Board of Directors is composed solely of Directors who are independent in accordance with the requirements of the New York Stock Exchange listing standards, the Securities Exchange Act of 1934, and the Company’s Corporate Governance Guidelines. The Audit Committee receives regular reports from the Global Chief Information Security Officer and the Chief Information Officer on cybersecurity matters. The Board also periodically receives cybersecurity updates directly from management.

Human Capital Strategy

Workforce Composition:

• Total Employees: Approximately 69,700 as of December 31, 2024, down from 79,100 in 2023, primarily due to 2024 refranchising activity.
• Geographic Distribution: Approximately 8,900 employees were located in the United States as of December 31, 2024.
• Skill Mix: The Company strives to attract and retain high-performing talent, including employees with advanced technology, artificial intelligence, and digital marketing skills, and/or digital and analytics capabilities.

Talent Management: Acquisition & Retention:

• Hiring Strategy: Aims to attract and retain a global workforce of top talent with diverse perspectives, experiences, and backgrounds that reflect the broad range of consumers and markets served worldwide.
• Retention Metrics: Not explicitly provided, but the Company focuses on investing in inspirational leadership, capability development, and providing learning opportunities to improve employee engagement and retention.
• Employee Value Proposition: Offers comprehensive and competitive compensation and benefits packages, ongoing employee learning and development, and a focus on health and well-being. Compensation programs are designed to reinforce the growth agenda and talent strategy, with regular pay equity analyses.

Diversity & Development:

• Diversity Metrics: Aspires to develop a global workforce with diverse perspectives, experiences, and backgrounds. Supports many employee-led inclusion networks around the world.
• Development Programs: Comprehensive global talent and development programs, including challenging and diverse experiences and opportunities. Provides online learning through a robust catalog of digital content, experiential learning opportunities, and the Thrive Opportunity Marketplace for short-term experiences and assignments. Offers Company-wide onboarding, coaching, and mentoring programs.
• Culture & Engagement: Rooted in a growth mindset, expecting employees to be curious, empowered, inclusive, and agile. Uses Performance Enablement and Culture & Engagement Survey platforms for employee feedback. Encourages regular, live communication, including quarterly global town halls with senior leadership.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Emissions Targets: Increasing concern over climate change is expected to continue to result in additional legal or regulatory requirements designed to reduce or mitigate the effects of carbon dioxide and other greenhouse gas emissions on the environment. The Company and its bottling partners take actions to reduce the Coca-Cola system’s carbon footprint.
• Carbon Neutrality: Not explicitly detailed in the provided text.
• Renewable Energy: Expanding renewable energy usage.

Supply Chain Sustainability:

• Supplier Engagement: Not explicitly detailed in the provided text.
• Responsible Sourcing: Procures Rainforest Alliance Certified and other certified green coffee through multiple suppliers. Procures tea from a diverse supplier base. Addresses water availability, quality, and sustainability as one of the key challenges facing its business.

Social Impact Initiatives:

• Community Investment: Guided by its purpose to refresh the world and make a difference, the Company invests to improve people’s lives, from its employees to all those who touch its business system, to its investors, to the communities it calls home. Beatriz Perez chairs The Coca-Cola Foundation, Inc., the Company’s primary international philanthropic arm.
• Product Impact: Offers an expanded portfolio of beverage choices, including reduced-, low-, and no-calorie beverage options; provides transparent nutrition information, featuring calories on the front of most packages; provides beverages in a range of packaging sizes for portion control; and markets responsibly, including no advertising targeted to children under 13. Committed to partnering with suppliers to invest in research and development of new noncaloric sweeteners and flavors.
• Workplace & Human Rights: Committed to building an inclusive culture that inspires and supports the growth of its employees, serves its communities, and shapes a strong and more sustainable business.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Sales of ready-to-drink beverages are somewhat seasonal, with the second and third calendar quarters historically accounting for the highest sales volumes.
• Economic Sensitivity: The volume of sales in the beverage business may be affected by weather conditions. Unusually cold or rainy weather during the summer months may have a temporary effect on the demand for products and contribute to lower sales.

Planning & Forecasting: The ability to accurately predict future cash flows, especially in emerging and developing markets, may impact the determination of fair value for impairment tests.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• Food, Drug, and Cosmetic Act: The safety, production, storage, transportation, distribution, advertising, marketing, labeling, and sale of products and their ingredients are subject to this act.
• Trade & Competition Laws: Subject to the Federal Trade Commission Act, the Lanham Act, state consumer protection laws, the Robinson-Patman Act of 1936, as amended, and the Clayton Antitrust Act of 1914, as amended.
• Environmental Protection: Subject to various environmental protection statutes and regulations, including those relating to the use and treatment of water resources, discharge of wastewater and air emissions. Increasing concern over climate change is expected to result in additional legal or regulatory requirements.
• Health & Safety: Subject to federal, state, and local workplace health and safety laws.
• Employment Practices: Subject to various federal and state laws and regulations governing employment practices, including those related to equal employment opportunity and compensation.
• Data Privacy: Subject to privacy and personal data protection laws, including the European Union’s General Data Protection Regulation, China’s Personal Information Protection Law, and the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act. At least 18 other U.S. states have passed similar comprehensive privacy laws.
• Alcohol Beverage Category: Directly entered the alcohol beverage category in numerous markets outside the United States, and in the United States, operates through a wholly owned, indirect, firewalled subsidiary. This exposes the Company to additional governmental regulations related to licensing, trade and pricing practices; labeling, advertising, promotion and marketing practices; and relationships with distributors.
• International Compliance: Business is subject to numerous similar statutes and regulations outside the United States, as well as other legal and regulatory requirements and regulatory reviews.

Trade & Export Controls:

• Export Restrictions: Required to comply with the Foreign Corrupt Practices Act and the Trade Sanctions Reform and Export Enhancement Act. U.S. trade sanctions against countries designated as state sponsors of terrorism and/or financial institutions could increase significantly.
• Sanctions Compliance: Compliance with Office of Foreign Assets Control trade sanction regulations and anti-boycott regulations.

Legal Proceedings:

• U.S. Federal Income Tax Dispute: The Coca-Cola Company is involved in ongoing litigation with the United States Internal Revenue Service for tax years 2007 through 2009 regarding transfer pricing. On August 2, 2024, the Tax Court entered a decision reflecting additional federal income tax of $2.7 billion for 2007-2009. With applicable interest, the total liability for 2007-2009 is $6.0 billion, which the Company paid on September 10, 2024. The Company appealed the Tax Court’s decision to the U.S. Court of Appeals for the Eleventh Circuit on October 22, 2024. The Company estimates that the potential aggregate remaining incremental tax and interest liability for tax years 2010 through 2024 could be approximately $12 billion as of December 31, 2024, if the Tax Court Methodology is ultimately upheld.
• Aqua-Chem Litigation: A lawsuit filed in 2002 seeking a declaratory judgment that the Company has no obligation to its former subsidiary, Aqua-Chem, Inc. (now Cleaver-Brooks, Inc.), for past, present, or future liabilities or expenses in connection with asbestos claims. The Georgia Case remains subject to a stay agreed to in 2004.
• Environmental Litigation: Lawsuits filed by the Mayor and City Council of Baltimore (June 2024) and Los Angeles County Counsel (October 2024) concerning the environmental impacts of plastic packaging on city lands and waterways. The complaints assert claims for violations of littering/dumping statutes, unfair trade practices, trespass, design defects, public nuisance, failure to warn, and negligence, seeking injunctive relief, compensatory, and/or punitive damages. The Company believes it has strong defenses to these claims.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: The effective tax rate was 18.6% in 2024 and 17.4% in 2023. This reflects the tax benefits of having significant operations outside the United States, which are generally taxed at rates lower than the statutory U.S. federal tax rate of 21.0%.
• Geographic Tax Planning: Tax incentive grants in Brazil, Costa Rica, Singapore, and Eswatini favorably impacted income tax expense by $346 million in 2024 and $332 million in 2023. The terms of these grants expire from 2025 to 2036, and the Company anticipates being able to extend or renew them.
• Tax Reform Impact: The Global Intangible Low-Taxed Income (GILTI) provisions of the Tax Reform Act are accounted for in the period that is subject to such taxes. The Company has not recorded incremental income taxes for additional outside basis differences of $9.3 billion in its investments in foreign subsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations.
• Unrecognized Tax Benefits: As of December 31, 2024, the gross amount of unrecognized tax benefits was $880 million. If the Company were to prevail on all uncertain tax positions, the net effect would be a benefit of $607 million, exclusive of any benefits related to interest and penalties. The Company had $631 million in interest and penalties related to unrecognized tax benefits accrued as of December 31, 2024.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: The Coca-Cola Company is generally self-insured for large portions of many different types of claims but uses commercial insurance above its self-insured retentions to reduce the risk of catastrophic loss. Self-insurance reserves totaled $168 million as of December 31, 2024.
• Risk Transfer Mechanisms: The Company uses derivative financial instruments (forward contracts, commodity futures contracts, option contracts, collars, and swaps) primarily to reduce its exposure to adverse fluctuations in foreign currency exchange rates, interest rates, commodity prices, and other market risks. All derivative positions are used to reduce risk by hedging an underlying economic exposure.
  • Foreign Currency Derivatives: Total notional values were $18.44 billion as of December 31, 2024.
  • Interest Rate Derivatives: Total notional values of derivatives designated as fair value hedges were $12.63 billion as of December 31, 2024. As of December 31, 2024, the Company did not have any interest rate swaps designated as a cash flow hedge.
  • Commodity Derivatives: Total notional values were $386 million as of December 31, 2024.
• Cybersecurity Insurance: The Company maintains cybersecurity insurance coverage as part of its overall risk mitigation strategy.