The Coca-Cola Co (NYSE: KO)
Coca Cola has had a rough year throughout 2015. Unfortunately, more bad news outlines the fact that the company’s year in 2016 may not be much better. The rough year this year and the signs of a rough year next year revolve around health. Today, we’ll talk about why KO had such a hard time this year, the sign that next year isn’t going to be much better, and what we can expect to see moving forward.
Why KO Had Such A Hard Time In 2015
As time passes, consumers are becoming more concerned with their health. As a result, more and more people are paying close attention to what they’re putting into their bodies with the foods they eat and the drinks they drink. Unfortunately, this has proven to be very bad news for Coca Cola. Ultimately, the company’s flagship products are its carbonated soft drinks. These are drinks that are known to be incredibly bad for health. In fact, a recent Harvard study outlined the dangers of drinking soft drinks. Among other problems, they found that those who drink KO or other soft drinks on a regular basis had a 26% higher chance of developing diabetes, men had a 20% higher chance of having a heart attack, and women had a 75% higher risk of developing gout. As a result of the health risks associated with soft drinks, consumers have been consuming far less of the sugar loaded beverages than we’ve seen in the past.
A Sign That The Problems Aren’t Coming To An End
Unfortunately for Coca Cola, it doesn’t seem as though their struggles are going to come to an end. In fact, KO recently announced that it may be closing some of its factories in India, the reason being that the Indian government has proposed a “sin tax”. The tax is relatively simple to understand. Products that are considered to be a danger to society, like KO products, will be taxed an extra 40% on their sale price. If this tax goes through, sales in India will slide dramatically. As a result, KO will be shutting down quite a few factories in India.
This outlines the major problem that Coca Cola is facing, and may be a prelude to the struggles the company is likely to go through in 2016. Consumers are already consuming less soft drinks. Now, a government is getting involved. However, the Indian government isn’t likely to be the only one. Over the years, as we continue to see more health risks associated with soft drinks, I wouldn’t be surprised to see other governments taking action. Ultimately, KO is going to have to find a way to make its products more healthy before this singular issue becomes a global trend.
What We Can Expect To See Moving Forward
Moving forward, I’m not expecting to see much by way of good news out of The Coca-Cola Co. The reality is that, over the years, we’ve learned that soft drinks are incredibly bad for those that drink them on a regular basis. Between diabetes, heart disease, and other health problems, it’s easy to see why consumers have made the decision to consume less of these sugary beverages. Unfortunately for KO and its investors, I don’t see this trend changing, and now that governments are getting involved, we’re likely to see even more declines in sales. With that said, I’m expecting more bad news out of KO throughout the rest of this year and next.
What Do You Think?
Where do you think KO is headed and why? Let us know your opinion in the comments below!
[Image Courtesy of Wikipedia]