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Coca-Cola's organic revenue rose 6% in the second quarter, driven by 2% growth in price/mix and a 4% increase in concentrate sales. Comparable operating profit grew 9%, as margin expanded 90 basis points to 35.6%, and comparable earnings per share grew 11% to $0.97.

Why it matters: Momentum remained strong in the second quarter, which benefited from a successful World Cup activation campaign, favorable weather, an easier year-over-year comparison, and broad-based volume gains across geographies and categories. Coca-Cola is building innovation hubs across its footprint, which we think will more effectively enable it to tailor new products to local market tastes. We expect this to support our long-term mid-single-digit organic revenue growth expectations. The firm raised 2026 organic revenue growth guidance to 5% (4%-5% previously) and comparable EPS growth guidance to 9%-10% (from 8%-9%) given strong first-half performance, though it expects more pressure in the second half.

The bottom line: We expect to increase our $74 fair value estimate by a mid- to high-single-digit percentage for wide-moat Coca-Cola. Even after that, we think shares are slightly overvalued, having risen more than 25% year to date, outperforming the 9% rise in the Morningstar US Market Index. We think Coke is equipped to navigate intense competitive pressures amid strained consumer spending to warrant an uptick in our sales and operating margin forecasts. We see more attractive upside in wide-moat PepsiCo's shares, as we think the market underappreciates its dominant snack business. As it continues to focus on innovation and affordability, we forecast the top line to grow midsingle digits annually over the next 10 years.

Between the lines: On July 16, Coca-Cola disclosed a ransomware cyberattack on Fairlife (roughly 2% of firmwide revenue), forcing it to halt production. Production has mostly resumed, and the company expects no material impact on product availability.

We've increased our fair value estimate to $75 per share from $74 due to the effect of the time value of money. Our intrinsic valuation now implies a 23 times multiple against our adjusted 2026 earnings estimate.

Coca-Cola's organic revenue rose 10% in the first quarter, driven by 2% growth in price/mix and an 8% increase in volume. Comparable operating profit grew 12%, as margin expanded 70 basis points to 33.8% and comparable earnings per share grew 18% to $0.86.

Our mid-single-digit sales CAGR projection over the next 10 years is driven by strong emerging market growth (we forecast Latin America and the Asia-Pacific combined to make up 35% of overall sales by 2035, up from 24% in 2025) and expansion in nonsparkling categories (sports and energy drinks) in product assortment and distribution channels. While increases in price/mix largely drove sales growth during 2022-25 as Coca-Cola flexed its pricing muscle amid cost inflation and currency headwinds, we forecast top-line growth to be slightly more balanced between price/mix and volume in 2026 and onward. We see growth settling into the 4%-6% long-term target range set by management, which we believe is appropriate, given industry dynamics. Coke has historically augmented organic growth with strategic acquisitions, and we expect it to continue doing so in the coming years. Given a lack of information about its acquisition pipeline, however, we will refrain from incorporating mergers and acquisitions deals into our financial modeling until we gain better visibility.

We model operating margin to widen by 170 basis points compared with 2025, to 33.0% at the end of our 10-year forecast period. We expect 60 basis points of gross margin expansion for the period to 62.2% by 2035, driven by a favorable mix shift resulting from new products and refranchising. We forecast improved leverage in selling and distribution expenses (18.5% of sales by 2035 versus 19.0% in 2025) as the firm leverages data analytics to lift efficiencies. We model higher dollar spending in digital marketing and localized content, but expect the overall advertising and marketing budget as a percentage of sales to fall to 10.8% by 2035, compared with 11.3% in 2025.

We believe Coca-Cola has built a wide economic moat around its global beverage operations based on strong intangible assets and a significant cost advantage. We have modeled the company to generate returns on invested capital, including goodwill, that average nearly 50% over our 10-year explicit forecast, comfortably surpassing our weighted average cost of capital estimate of 7%.

As the world’s best-known beverage company, Coca-Cola owns a strong portfolio of storied and iconic brands that resonate with consumers around the world, making its products the beverage of choice both at home and away from home. The connection that Coca-Cola cultivates and maintains with generations of consumers has enabled the firm to dominate the carbonated soft drink category at the core of its business (69% of Coca-Cola’s 2025 unit case volume sold). According to Euromonitor data, Coca-Cola dominates the CSD category with a volume share of 42% globally in 2025, 25 percentage points ahead of its main competitor, wide-moat PepsiCo (17%). Other than the flagship Coca-Cola brand, Sprite, Fanta, Diet Coke, and Coke Zero also rank as top-selling CSD brands that enjoy a loyal following. Leveraging Coca-Cola’s retail relationship, the company has been able to establish a strong position in adjacent categories as well, such as water, juice, and sports drinks, with brands including Dasani, Minute Maid, and Powerade, respectively.

Coca-Cola’s brand appeal results in a steady price premium over lesser-known brands and low demand elasticity, thus affording considerable pricing power. Unlike its lesser competitors, Coca-Cola enjoys the flexibility to pass on cost inflation using a combination of price hikes, pack variation, and channel mix shift, driving price/mix to consistently match or exceed headline inflation. Even as the covid-19 lockdowns dealt a heavy blow to on-premises beverage consumption in 2020, overall Coke volume held up (down midsingle digits from 2019, while food-service sales saw low- to midteens contraction) as consumers flocked to retailers and online marketplaces to stock up on Coke products for at-home consumption. The less favorable channel mix shift and volume notwithstanding, pricing was resilient at a mild 2% decline, with key markets in the US and Latin America still up in the low single digits. The notably low penetration of private-label products (a mere 6% in the US, versus high teens to low 20s across the food aisle) in the CSD category despite a long history and massive size speaks to Coca-Cola’s brand strength.

Thanks to the strength and breadth of its brand portfolio, Coca-Cola has been able to attract to its ecosystem bottlers and distribution partners in key regions such as the US, Western Europe, Latin America, and the Asia-Pacific that have good capital, business acumen, and operational expertise. The prospects of solid pricing and volume, as well as an expected high penetration in both retail and food-service channels to ensure density of delivery and attractive returns on distribution logistics investments, are precisely what motivate the bottlers to commit capital to the 10-year renewable partnership with Coca-Cola and take charge of the heavy lifting of manufacturing and distribution. Coca-Cola only owns a sliver of the bottling and distribution capacity on the Coke system following refranchising, but the company aligns its economic interests closely with those of its bottlers with an incidence-based pricing model (whereby Coca-Cola sells concentrates and syrup to dedicated bottlers and in return takes a predetermined but undisclosed slice of the bottlers’ revenue from finished beverage products). Through these arrangements, Coca-Cola exerts strong influence over innovation, product rollout, marketing, and the go-to-market strategy of its bottlers, which are essential in shaping Coke’s tight relationship with the retail channel and food-service providers.

CSD category leader Coke's products are indispensable to retailers and a key traffic driver, thus earning favorable shelf allocation and placement. Coca-Cola also shares timely data analytics of broader consumption patterns to facilitate better planning of inventory, shelf space, and promotions. Coke dominates fountain beverages served at fast-food locations. In the US, out of the roughly 90,000 locations of the 10 largest fast food chains, 76% serve fountain drinks under the Coca-Cola banner, according to Beverage Digest. As Coca-Cola continues to invest heavily (2025 advertising budget of $5.4 billion, 11% of sales), the enhancement of Coke brands will further reinforce the strategic relationship with retailers and foodservice providers.

We also see a significant cost advantage stemming from scale. With a sales base of $48 billion in 2025 and a global manufacturing and distribution footprint, Coca-Cola is in a position to gain scale efficiency across the whole supply chain, resulting in lower costs that are hard for smaller peers to match. In the developed markets such as the US and Western Europe, where premiumization is the key growth driver, a lower cost structure allows more investments in differentiation (in ingredients, flavors, packaging) while keeping prices competitive. In emerging markets where affordability remains a hurdle, lower costs give Coca-Cola the room to inch down entry price points to expand its addressable consumer base. In addition, the scale and experience of a well-connected global Coke system should also enable it to accelerate commercialization of new products and to roll out and scale product innovation at a faster pace and a lower cost compared with rivals.

Coke can leverage strong bottler relationships in underpenetrated emerging markets to drive volume growth with classic recipes as well as new products tailored to local tastes.

Heavy investments in a digitalized supply chain and data analytics have better aligned Coke and its bottlers in product planning, manufacturing, and go-to-market strategy.

Strategic acquisitions in attractive beverage categories including premium dairy align with consumer preferences and should further buoy sales expansion.

Secular headwinds in carbonated soft drink demand in developed markets are a challenge to Coca-Cola’s long-term growth outlook.

The company's brand portfolio and product lineup in nonsparkling categories are less robust, and heavy investments are needed to bolster its competitive position.

With 60% of revenue from international markets, Coke faces constant currency fluctuations that drive volatilities in reported earnings.