The news about PepsiCo stealing from its major rival Coca-Cola Company had strike the market. Many financial media sources have stated that PepsiCo would soon be availing a title of exclusive food and beverage sponsor of the National Basketball Association in North America. No wonder it is biggest announcement to be heard which will surely be upending 30 years deal of NBA (which it had associated with Coca Cola).
However, no further details regarding durations and terms/conditions have been put in froth to media regarding the deal. As the news is a biggest success for PepsiCo, investors need to get themselves aware of the following:
Since a long time, PepsiCo has been officially sponsoring NFL, MLB, and the NHL. Adding the NBA to this list will build PepsiCo’s grip stronger in the sports industry. Over several years, PepsiCo had been winning over CocaCola in different ways. Earlier in 2015, as per Beverage Digest reports, Pepsi had overtaken Diet Coke as the second most popular soda in USA.
This collection of seemingly small victories has really added up as company has more richly rewarded its shareholders in the past year than today.
PepsiCo’s revenue and earnings/share grew 4% and 6% respectively in year 2014, after managing currency impacts. Likewise, Coca Cola’s net revenue was flat last year, after excluding currency impacts. Coca-Cola’s Global case volumes sparkling beverages grew by just 1% in the 4Q and for the full year, while Coca-Cola brand’s volume for the core was roughly flat for the year.
No doubt, PepsiCo has produced a much higher total return for its investors than Coca-Cola over the past year.A deal with the NBA would further widen up PepsiCo’s opportunities in growing markets. For instance, PepsiCo’s food and beverage partner in China, Tingyi Holding Corp, will be the NBA’s exclusive partner there.
