The Coca-Cola Co (NYSE:KO) shares traded nearly flat in 2016. The company continued its trend of seeing declines in carbonated beverages, but increases across the company’s non-carbonated beverage portfolio. Leadership changes coming to Coca-Cola could now put an even bigger emphasis on diversifying the company and continuing a pattern of acquisitions both internationally and in the non-carbonated beverage sector.
Late in 2016, PepsiCo, Inc. (NYSE:PEP) and Dr. Pepper Snapple Group Inc. (NYSE:DPS) both made acquisitions to strengthen their lineups. Pepsi paid $200 million to acquire probiotic beverage maker Kevita. Dr. Pepper Snapple Group bought Bai Brands for $1.7 billion in an ambitious push into antioxidant beverages.
Coca-Cola has been relatively quiet on the acquisition front of late, with a couple international deals done, but no major U.S. beverage deals. On May 1, 2017, the company will turn a new leaf and introduce its new CEO James Quincey. After 10 years of serving various roles with Coca-Cola, including his current Chief Operating Officer role, Quincey will take over the top role from Muhtar Kent, who is stepping down.
Many investors believe new leadership could lead to an acquisition push by KO stock, and I have to agree with that. Quincey was instrumental in major international acquisitions like Innocent Juice and Jugos del Valle. I believe Quincey’s position at Coca-Cola will lead to at least one major deal from the beverage giant in 2017.
In September, Coca-Cola highlighted bolt-on acquisitions as one of several items that would bring growth for KO shareholders. The other major pieces were scaling globally and growing the non-carbonated soft drink categories.
Back in 2000, carbonated soft drinks accounted for 84% of Coca-Cola’s unit case volume. In 2015, that figure had dropped to 64% as the company has done a good job of diversifying away from the declining category.
Of course, Coca-Cola may continue its route of acquiring successful international brands or private companies in a push to scale the small companies on its own. Keep in mind that rumors continue to make Coca-Cola an acquisition target of its own by the largest beer maker in the world, Anheuser-Busch InBev SA NV (ADR) (NYSE:BUD), a company that has grown through a series of massive acquisitions and usually gets what it wants when it comes to deals.
Here’s a look at three publicly traded companies that might make good acquisitions for Coca-Cola in 2017.