Coca-Cola Consolidated, Inc.

Coca-Cola Consolidated, Inc. operates in the nonalcoholic beverage industry, distributing, marketing and manufacturing beverages in territories spanning 14 states and the District of Columbia. The Company is the largest Coca-Cola bottler in the United States. Approximately 85% of the Company's total bottle/can sales volume to retail customers consists of products of The Coca-Cola Company, which include some of the most recognized and popular beverage brands in the world. The Company also distributes products for several other beverage companies, including Monster Energy Company and Keurig Dr Pepper Inc. The nonalcoholic beverage industry is highly competitive for both sparkling and still beverages, with principal competitors including local bottlers of PepsiCo, Inc. products and, in some regions, local bottlers of Dr Pepper products. The principal methods of competition are new brand and product introductions, point-of-sale merchandising, new vending and dispensing equipment, packaging changes, pricing, sales promotions, product quality, retail space management, customer service, frequency of distribution and advertising.

The Company's primary competitors include local bottlers of PepsiCo, Inc. products and, in some regions, local bottlers of Dr Pepper products. The Company's largest customers, Walmart Inc. and The Kroger Co., accounted for approximately 36% of the Company's 2025 total bottle/can sales volume to retail customers and approximately 29% of the Company's 2025 total net sales. The Company believes it is competitive in its territories with respect to the principal methods of competition. The Company's competitive advantages are supported by its exclusive distribution rights under comprehensive beverage agreements with The Coca-Cola Company and Coca-Cola Refreshments USA, LLC, which grant exclusive rights to distribute, promote, market and sell authorized brands in certain territories. The Company also benefits from its participation in the Coca-Cola system governance entities, including CONA Services LLC and the National Product Supply Group.

The Company generates revenue through the distribution, marketing and manufacture of nonalcoholic beverages. Sales are divided into two main categories: bottle/can sales and other sales. Bottle/can sales primarily include products packaged in plastic bottles and aluminum cans. Other sales include sales to other Coca-Cola bottlers, post-mix sales, transportation revenue and equipment maintenance revenue. The Company's products are sold and distributed in the United States through various channels, including selling directly to customers such as grocery stores, mass merchandise stores, club stores, convenience stores and drug stores, selling to on-premise locations such as restaurants, schools, amusement parks and recreational facilities, and selling through other channels such as vending machine outlets. The Company also distributes its products using alternative routes to market, which include distribution by third-party distributors, the manufacturer of the product or the customer's supply chain infrastructure. The Company receives a fee in connection with the sale of products distributed via ARTM within its territories; however, the sale of such products is not included in the reported product volume sold by the Company.

The Company offers a range of nonalcoholic beverage products and flavors, including both sparkling and still beverages. Sparkling beverages are carbonated beverages and the Company's principal sparkling beverage is Coca-Cola. Still beverages include energy products and noncarbonated beverages such as bottled water, ready-to-drink tea, ready-to-drink coffee, enhanced water, juices and sports drinks. Principal sparkling products include Coca-Cola, Coca-Cola Zero Sugar, Diet Coke, Sprite, Fanta, Barqs Root Beer, Mello Yello, Mr. Pibb, Seagrams Ginger Ale and Fresca. Principal still products include BODYARMOR, Core Power, Dasani, Dunkin' Coffee, fairlife, glacéau smartwater, glacéau vitaminwater, Gold Peak, Minute Maid, POWERADE, POWERADE Powerwater and Topo Chico. Products licensed to the Company by other beverage companies include Ale 8, Bang Energy, Diet Dr Pepper, Dr Pepper, Dr Pepper Zero Sugar, FLRT, Full Throttle, Monster Energy, NOS, Reign/Reign Storm, Sundrop and Diet Sundrop. For fiscal year 2025, Sparkling net sales were $4,249,847,000 ¹ and Still net sales were $2,362,873,000 ². Total bottle/can sales volume to retail customers during 2025 was approximately 46% bottles and 54% cans.

The Company's Nonalcoholic Beverages segment represents the vast majority of the Company's consolidated net sales and income from operations. For fiscal year 2025, the Nonalcoholic Beverages segment reported net sales of $7,183,782,000 ³ and income from operations of $925,165,000 ⁴. The additional operating segment, which includes the Red Classic subsidiaries, does not meet the quantitative threshold for separate reporting and has been reported as 'All Other.' For fiscal year 2025, the All Other segment reported net sales of $325,969,000 ⁵ and income from operations of $25,491,000 ⁶. The Company is also a shareholder of South Atlantic Canners, Inc., a manufacturing cooperative managed by the Company, and utilizes a portion of the production capacity from the Bishopville manufacturing plant.

On November 7, 2025, the Company entered into a purchase agreement with Carolina Coca-Cola Bottling Investments, Inc., an indirect wholly owned subsidiary of The Coca-Cola Company, The Coca-Cola Company and J. Frank Harrison, III, pursuant to which the Company agreed to purchase and the Seller agreed to sell all of the Seller's shares of Common Stock for a cash payment in the aggregate amount of approximately $2.4 billion ⁷. The Company funded the purchase price with cash on hand and a term loan obtained under a certain bridge loan agreement. During 2025, the Company repurchased 1,778,081 ⁸ shares of Common Stock under the Share Repurchase Program for an aggregate purchase price of $212.0 million ⁹, excluding fees and expenses. On March 4, 2025, the Company announced that its Board of Directors had approved a 10-for-1 forward stock split of Common Stock and Class B Common Stock. During the first quarter of 2025, the Company began operations in a new 430,000-square foot ¹⁰ automated distribution center in Columbus, Ohio. The Company also made cash donations of approximately $52 million ¹¹ to various charities and donor-advised funds in 2025.

Net sales increased 4.8% ¹² to $7.23 billion ¹³ in fiscal year 2025, compared to $6.90 billion ¹⁴ in fiscal year 2024. Gross profit increased $119.2 million ¹⁵, or 4.3% ¹⁶, while gross margin decreased 20 basis points ¹⁷ to 39.7% ¹⁸. Income from operations increased $30.3 million ¹⁹ to $950.7 million ²⁰ in 2025. Net income in 2025 declined $62.5 million ²¹ to $570.6 million ²², as compared to 2024. Cash flows from operations for 2025 were $931.9 million ²³, compared to $876.4 million ²⁴ for 2024. In 2025, the Company invested $312.3 million ²⁵ in capital expenditures.

The Company expects capital expenditures to be approximately $300 million ²⁶ in fiscal year 2026. The Company anticipates that the amount it could pay annually under the acquisition related contingent consideration arrangements for the distribution territories subject to acquisition related sub-bottling payments will be in the range of approximately $50 million ²⁷ to $80 million ²⁸ for the next five years, including in fiscal year 2026.

The Company's growth strategy includes executing its commercial strategy, which focuses on obtaining shelf space within stores and remaining in-stock across its portfolio of brands and packages in a profitable manner. The Company continues to invest in tools and technology to enable its teammates to operate more effectively and efficiently with customers. Recent and upcoming product introductions include Sprite + Tea, POWERade Powerwater, new flavors and packages of BODYARMOR, POWERade, Monster and Topo Chico, the relaunch of Mr. Pibb and Mr. Pibb Zero Sugar, and during 2026, the Company will launch Coca-Cola Cherry Float, FLRT Energy Drink and enhanced glass offerings of Coca-Cola Original Taste and other brands. The Company is also focused on implementing optimal methods of distribution, including alternative routes to market, and during 2025, approximately two-thirds of its post-mix gallons and less than 10% of its bottle/can volume were delivered through ARTM.

The Company's revenue management strategy focuses on pricing its brands and packages optimally within product categories and channels, creating effective working relationships with customers and making disciplined, fact-based decisions. Pricing decisions are made considering a variety of factors, including brand strength, competitive environment, input costs, the roles certain brands play in the product portfolio and other market conditions. The Company is continually focused on optimizing its supply chain, which includes identifying nearby warehousing and distribution operations that can be consolidated into new facilities to increase capacity, expand production capabilities, reduce overall production costs and add automation. The Company undertook significant capital expenditures to optimize its supply chain and to invest for future growth during 2025, and expects to continue to make significant investments during fiscal year 2026.

Aluminum costs, including the impact of elevated import tariffs, adversely affected the Company's gross margin in 2025, particularly in the back half of the year. The reduction in gross margin also resulted from a shift in sales toward the Still portfolio, which generally have lower gross margins compared to Sparkling beverages. Selling, delivery and administrative expenses as a percentage of net sales in 2025 remained stable as compared to 2024 at 26.6% ²⁹. The increase in SD&A expenses was primarily driven by the cost of labor, which includes annual wage adjustments and an additional investment in the base wages of front-line teammates, which became effective at the beginning of the third quarter of 2025.

The Company continues to make significant reinvestments in its business to evolve its operating model and to accommodate future growth and portfolio expansion, including supply chain optimization. The Company expects additions to property, plant and equipment in 2026 to be approximately $300 million ³⁰. The Company is focused on implementing optimal methods of distribution of its products within its territories, and its typical DSD method uses Company-owned vehicles and warehouses, but it increasingly shifted to alternative methods of distribution during 2024 and continued to use ARTM during 2025. Through its investment in CONA Services LLC, the Company has built a digitally enabled selling platform called MyCoke that it believes has enabled, and will continue to enable, it to better serve its customers.

On August 20, 2024, the Company announced that its Board of Directors had approved a Share Repurchase Program under which the Company was initially authorized to repurchase up to $1.00 billion ³¹ of Common Stock. On November 7, 2025, the Company's Board of Directors reduced the total authorization under the Share Repurchase Program from $1.00 billion ³² to $400.0 million ³³. As of December 31, 2025, the total remaining share repurchase authorization was $136.3 million ³⁴. The Company's Board of Directors has declared, and the Company has paid, dividends on the Common Stock and the Class B Common Stock for more than 30 years. Dividends paid per share on both the Common Stock and the Class B Common Stock were $1.00 ³⁵ per share in 2025. Total cash dividends paid were $86.7 million ³⁶ in 2025.

The Company faces headwinds from increased costs or disruption, unavailability or shortages of raw materials, fuel and other supplies. Raw material costs, including costs for plastic bottles, aluminum cans, PET resin, carbon dioxide and high-fructose corn syrup, are subject to significant price volatility, which may be worsened by periods of increased demand, supply constraints, high inflation or uncertainty around tariffs. The Company estimates a 10% increase in the market prices of its key commodities, including aluminum, PET resin and high-fructose corn syrup, and excluding concentrate, over the current market prices would cumulatively increase costs during the next 12 months by approximately $35 million ³⁷ to $40 million ³⁸ assuming no change in volume. The Company also faces headwinds from changes in public and consumer perception and preferences, including concerns related to product safety and sustainability, artificial ingredients, brand reputation and obesity, which could reduce demand for the Company's products.

The Company is subject to the risk of increased costs arising from adverse changes in certain commodity prices. The Company estimates a 10% decrease in the underlying commodity prices would have decreased the fair value of its commodity derivative instruments by approximately $4 million ³⁹ as of December 31, 2025. The Company is also subject to interest rate volatility with regard to existing issuances of debt, including its revolving credit facility and the Term Loan Facilities. Based on the Company's variable rate debt outstanding as of December 31, 2025, the Company estimates a 1% increase in interest rates would increase annual interest expense by $13.5 million ⁴⁰. The Company's acquisition related contingent consideration liability is also impacted by changes in interest rates, and the Company estimates a 10-basis point change in the underlying risk-free interest rate used to estimate the Company's WACC would result in a change of approximately $7 million ⁴¹ to the Company's acquisition related contingent consideration liability.

The Company faces concentration risks as its largest customers, Walmart Inc. and The Kroger Co., accounted for approximately 36% ⁴² of the Company's 2025 total bottle/can sales volume to retail customers and approximately 29% ⁴³ of the Company's 2025 total net sales, and the loss of either could have a material adverse effect. The Company's acquisition related contingent consideration liability totaled $717.9 million ⁴⁴ as of December 31, 2025, and changes in the weighted average cost of capital or future cash flow projections could result in material non-cash expense. The Company's debt level of $2.79 billion ⁴⁵ as of December 31, 2025 requires a substantial portion of future cash flows for debt service, and a 1% increase in interest rates on variable rate debt would increase annual interest expense by $13.5 million ⁴⁶. The Company is subject to commodity price risk, and a 10% increase in key commodity prices would increase costs by approximately $35 million ⁴⁷ to $40 million ⁴⁸ over 12 months. The Company's reliance on The Coca-Cola Company is significant, as approximately 85% ⁴⁹ of total bottle/can sales volume consists of its products, and the Company's beverage agreements generally do not obligate marketing funding support.

Management's message emphasizes the Company's strong operating performance, with net sales increasing 4.8% ⁵⁰ to $7.23 billion ⁵¹ in 2025. Key priorities for the Company include executing the commercial strategy, executing the revenue management strategy, optimizing the supply chain, generating cash flow, determining the optimal route to market and creating and maintaining a digitally enabled selling platform. Management highlights that the Company has several initiatives in place to optimize cash flow, improve profitability, prudently manage capital expenditures and enhance capital returns to stockholders. The Company expects capital expenditures to be approximately $300 million ⁵² in fiscal year 2026. Management also notes that the Company has and expects to continue to return value to its stockholders, having returned approximately $2.7 billion ⁵³ to stockholders through share repurchases and dividends in 2025.