COCA COLA CO

The Coca-Cola Company is a total beverage company operating in the highly competitive commercial beverage industry. Beverage products bearing its trademarks, sold in the United States since 1886, are now sold in more than 200 countries and territories. The Company owns or licenses and markets numerous beverage brands grouped into the following categories: Trademark Coca-Cola; sparkling flavors; water, sports, coffee and tea; juice, value-added dairy and plant-based beverages; and emerging beverages. Beverages bearing trademarks owned by or licensed to the Company account for 2.2 billion of the estimated 65 billion servings of all beverages consumed worldwide every day. The Company operates in two lines of business: concentrate operations and finished product operations. Concentrate operations typically generate net operating revenues by selling beverage concentrates, syrups, including fountain syrups, and certain finished beverages to authorized bottling operations. Finished product operations generate net operating revenues by selling sparkling soft drinks and a variety of other finished beverages to retailers, or to distributors and wholesalers who in turn sell the beverages to retailers. The Company's operating structure includes the following operating segments: EMEA; Latin America; North America; Asia Pacific; and Bottling Investments. Effective January 1, 2025, the Company sunset its Global Ventures operating segment to streamline and simplify its operating structure.

The commercial beverage industry is highly competitive and consists of numerous companies, ranging from small or emerging to very large and well established. Primary competitors include PepsiCo, Inc., Nestlé S.A., Keurig Dr Pepper Inc., Danone S.A., Suntory Beverage & Food Limited, Anheuser-Busch InBev, Kirin Holdings, Heineken N.V., Diageo plc and Red Bull GmbH. The Company also competes against numerous regional and local companies and, increasingly, against smaller companies developing microbrands and selling them directly to consumers through e-commerce retailers and platforms. In some markets, the Company competes against retailers that have developed their own store or private-label beverage brands. The Company's competitive strengths include leading brands with high levels of consumer recognition and loyalty; a worldwide network of bottlers and distributors; sophisticated marketing capabilities; and a talented group of dedicated employees. The Coca-Cola system sold 33.8 billion and 33.7 billion unit cases of products in 2025 and 2024, respectively. Sparkling soft drinks represented 69% of worldwide unit case volume in both 2025 and 2024. Trademark Coca-Cola accounted for 47% of worldwide unit case volume in both 2025 and 2024. In 2025, unit case volume in the United States represented 16% of the Company's worldwide unit case volume. The five largest independent bottling partners based on unit case volume in 2025 were Coca-Cola FEMSA, Coca-Cola Europacific Partners plc, Coca-Cola HBC AG, Arca Continental, S.A.B. de C.V., and Swire Coca-Cola Limited, which combined represented 44% of total worldwide unit case volume.

The Company generates a significant portion of net operating revenues by selling concentrates and syrups to independent bottling partners. For the year ended December 31, 2025, one bottler accounted for 10% of net operating revenues, which are reflected in the EMEA and Asia Pacific operating segments. The Company's concentrate operations are included in its geographic operating segments. Finished product operations consist primarily of consolidated bottling and distribution operations, which are included in the Bottling Investments operating segment. In certain markets, the Company also operates non-bottling finished product operations in which it sells finished beverages to distributors and wholesalers that are generally not one of the Company's bottling partners. Additionally, the Company sells directly to consumers through retail stores operated by Costa, with these sales included in the EMEA operating segment regardless of the physical location of the retail stores. In the United States, the Company manufactures fountain syrups and sells them to fountain retailers, or to authorized fountain wholesalers or bottling partners, with these fountain syrup sales included in the North America operating segment. Concentrate operations represented 59% of total net operating revenues in both 2025 and 2024, while finished product operations represented 41% in both years. Concentrate operations represented 85% of total worldwide unit case volume in both 2025 and 2024, while finished product operations represented 15% in both years.

The Company owns and markets numerous valuable beverage brands. Sparkling soft drink brands include Coca-Cola, Diet Coke/Coca-Cola Light, Coca-Cola Zero Sugar, Fanta, Fresca, Schweppes (owned by the Company in certain countries other than the United States), Sprite and Thums Up. Water, sports, coffee and tea brands include Aquarius, Ayataka, BODYARMOR, Ciel, Costa, Crystal, Dasani, Fuze Tea, Georgia, glacéau smartwater, glacéau vitaminwater, Gold Peak, I LOHAS, Powerade and Topo Chico. Juice, value-added dairy and plant-based beverage brands include Core Power, Del Valle, fairlife, innocent, Maaza, Minute Maid, Minute Maid Pulpy, Santa Clara and Simply. The Company has also directly entered the alcohol beverage category in numerous markets outside the United States. In the United States, the Company has established a wholly owned, indirect, firewalled subsidiary, which uses third-party manufacturers and distributors to produce, distribute and sell alcohol products in the United States and also authorizes alcohol-licensed third parties to use certain of its trademarks and related intellectual property on alcohol beverages that contain Company beverage bases. The Company's approach in alcohol focuses on three segments of alcohol ready-to-drink beverages: pre-mixed cocktails (e.g., Jack Daniel's & Coca-Cola), flavored alcohol beverages (e.g., Lemon-Dou) and hard seltzers (e.g., Topo Chico Hard Seltzer).

The Company's operating segments include EMEA, Latin America, North America, Asia Pacific, and Bottling Investments. The EMEA operating segment reported net operating revenues of $10,826 million in 2025, representing 22.6% of Company net operating revenues, compared to $10,268 million in 2024, representing 21.8%. Latin America reported net operating revenues of $6,335 million in 2025, representing 13.2% of Company net operating revenues, compared to $6,478 million in 2024, representing 13.8%. North America reported net operating revenues of $19,574 million in 2025, representing 40.8% of Company net operating revenues, compared to $18,888 million in 2024, representing 40.1%. Asia Pacific reported net operating revenues of $5,305 million in 2025, representing 11.1% of Company net operating revenues, compared to $5,149 million in 2024, representing 10.9%. Bottling Investments reported net operating revenues of $5,757 million in 2025, representing 12.0% of Company net operating revenues, compared to $6,199 million in 2024, representing 13.2%. Corporate reported net operating revenues of $144 million in 2025, representing 0.3% of Company net operating revenues, compared to $79 million in 2024, representing 0.2%.

During 2025, the Company recorded other operating charges of $1,261 million, which included $960 million related to the impairment of the BodyArmor trademark, $97 million related to the Company's productivity and reinvestment program, and $47 million related to the remeasurement of the contingent consideration liability to fair value in conjunction with the fairlife acquisition, which brought the total liability to $6,173 million and was paid in March 2025. Other operating charges also included $44 million related to the impairment of a trademark in Latin America, $41 million related to the impairment of a trademark and property, plant and equipment in Asia Pacific, $35 million related to an indemnification agreement entered into as a part of the refranchising of certain bottling operations, $15 million for the amortization of noncompete agreements related to the BodyArmor acquisition, $12 million of transaction costs related to divestiture activities, and $10 million related to tax litigation expense. In 2024, the Company recorded other operating charges of $4,163 million, which included $3,109 million related to the remeasurement of the contingent consideration liability to fair value in conjunction with the fairlife acquisition, $760 million related to the impairment of the BodyArmor trademark, $133 million related to the Company's productivity and reinvestment program, and $126 million related to the impairment of a trademark in Latin America. In 2025, the Company recognized a gain of $1,952 million related to the sale of its ownership interest in Coca-Cola Consolidated, Inc., a net gain of $409 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities, a gain of $331 million related to the sale of a portion of its ownership interest in CCEP, dividend income of $159 million, a gain of $102 million related to the refranchising of bottling operations in certain territories in India, and a gain of $31 million related to the substantial liquidation of a joint venture in China. The Company also recorded a charge of $1,274 million related to bottling operations in Africa that became held for sale, a charge of $393 million related to the sale of finished product operations in Nigeria, other-than-temporary impairment charges of $40 million related to an equity method investee in Latin America and $25 million related to a joint venture in Latin America, a charge of $36 million related to the refranchising of certain bottling operations in Ghana, and expense of $22 million related to the non-service cost components of net periodic benefit cost.

Net operating revenues were $47,941 million in 2025, compared to $47,061 million in 2024, an increase of $880 million, or 2%. Gross profit margin increased to 61.6% in 2025 from 61.1% in 2024. Operating income was $13,762 million in 2025, compared to $9,992 million in 2024, an increase of $3,770 million, or 38%. Operating margin increased to 28.7% in 2025 from 21.2% in 2024. Consolidated net income was $13,137 million in 2025, compared to $10,649 million in 2024. Net income attributable to shareowners of The Coca-Cola Company was $13,107 million in 2025, compared to $10,631 million in 2024. Diluted net income per share was $3.04 in 2025, compared to $2.46 in 2024. Net cash provided by operating activities was $7,408 million in 2025, compared to $6,805 million in 2024.

Based on current tax laws, including the impact of several countries enacting global minimum tax regulations, the Company's effective tax rate in 2026 is expected to be approximately 20.9%, before considering the potential impact of any significant operating and nonoperating items that may affect the effective tax rate. This rate does not include the impact of the ongoing tax litigation with the IRS, if the Company were not to prevail. The Company currently expects 2026 capital expenditures to be approximately $2.2 billion ¹. During 2026, the Company also expects to repurchase shares to offset dilution resulting from employee stock-based compensation plans. At its February 2026 meeting, the Board of Directors increased the regular quarterly dividend to $0.53 per share ², equivalent to a full year dividend of $2.12 per share in 2026 ³. The annualized common stock dividend was $2.04 per share ⁴ and $1.94 per share ⁵ in 2025 and 2024, respectively. The Company expects net periodic pension cost to be approximately $87 million ⁶ in 2026, a decrease from $121 million ⁷ in 2025 primarily due to special termination benefits and curtailment charges in 2025. The Company expects to contribute approximately $27 million ⁸ in 2026 to its pension trusts, all of which will be allocated to international plans.

The Company is focused on the following growth pillars: shaping a portfolio of loved brands; transforming marketing and innovation agenda; optimizing the Coca-Cola ecosystem; building talent and capabilities; and enhancing license to win. The Company continues to invest in its portfolio of brands, strategic capabilities and people. The Company is increasing investments in e-commerce to support retail and meal delivery services, offering more package sizes that are fit-for-purpose for online sales and shifting more consumer and trade promotions to digital. The Company is also focused on digitalizing the Coca-Cola system by creating more relevant and personalized experiences wherever the system interacts with consumers, finding ways to create more powerful digital tools and capabilities for retail customers, and digitalizing operations through the use of data, artificial intelligence, automation, robotics and digital devices to increase efficiency and productivity. The Company has directly entered the alcohol beverage category in numerous markets outside the United States, and in the United States has established a wholly owned, indirect, firewalled subsidiary to produce, distribute and sell alcohol products. The Company's approach in alcohol focuses on three segments of alcohol ready-to-drink beverages: pre-mixed cocktails, flavored alcohol beverages and hard seltzers.

The Company is continuing to invest in innovation and to partner with suppliers to invest in research and development of new noncaloric sweeteners and flavors. The Company is committed to meeting changing consumer needs and to generating growth through its evolving portfolio of beverage brands and products, including numerous low- and no-calorie products; selectively expanding into other profitable categories of the commercial beverage industry; investing in innovative and more sustainable packaging; and providing easy-to-access information about beverages on its website. The Company is also focused on expanding its use of reusable packaging, including refillable or returnable glass and plastic bottles, as well as dispensed and fountain delivery models. The Company has taken and continues to take actions to reduce the Coca-Cola system's carbon footprint, for example, by increasing its use of recycled packaging materials, expanding renewable energy usage, and participating in environmental and sustainability programs.

The Company's gross profit margin increased to 61.6% in 2025 from 61.1% in 2024, primarily due to the impact of favorable pricing initiatives and the impact of the prior year refranchising of bottling operations in the Philippines, Bangladesh and certain territories in India, partially offset by the unfavorable impact of foreign currency exchange rate fluctuations and higher commodity costs. The Company expects inflationary pressures on certain input and other costs to continue to impact its business in 2026. The Company's attempts to offset cost pressures, such as through price increases of some products, may not be successful. Higher product prices may result in reductions in sales volume. The Company believes that, over time, it will be able to increase prices to counteract the majority of the inflationary effects of increasing costs and to generate sufficient cash flows to maintain productive capability. The Company continuously searches for productivity opportunities in its business. In 2025, the Company recorded $97 million related to its productivity and reinvestment program.

The Company's supply chain is dependent upon various ingredients and other raw materials and packaging materials. Some raw materials and supplies are available from a limited number of suppliers, or from a sole supplier, or are in short supply when seasonal demand is at its peak. Adverse and extreme weather conditions may affect the supply of agricultural commodities from which key ingredients for products are derived and manufactured. The Company and its independent bottlers operate a large fleet of trucks and other motor vehicles to distribute beverage products to customers, and use a significant amount of electricity, natural gas and other energy sources to operate production plants, bottling plants and distribution facilities. The Company is in the process of increasing its dairy production capacity. As of December 31, 2025, the Company had approximately 65,900 employees, compared to approximately 69,700 employees as of December 31, 2024. The decrease in the total number of employees was primarily due to 2025 divestiture activity. As of December 31, 2025, approximately 400 employees in North America were covered by collective bargaining agreements.

The Company's current capital allocation priorities are as follows: investing wisely to support business operations, continuing to grow the dividend payment, enhancing the beverage portfolio and capabilities through consumer-centric acquisitions, and using excess cash to repurchase shares over time. The Company currently expects 2026 capital expenditures to be approximately $2.2 billion ⁹. During 2026, the Company also expects to repurchase shares to offset dilution resulting from employee stock-based compensation plans. At its February 2026 meeting, the Board of Directors increased the regular quarterly dividend to $0.53 per share ¹⁰, equivalent to a full year dividend of $2.12 per share in 2026 ¹¹. The annualized common stock dividend was $2.04 per share ¹² and $1.94 per share ¹³ in 2025 and 2024, respectively. The Company paid dividends of $8,779 million ¹⁴ and $8,359 million ¹⁵ during the years ended December 31, 2025 and 2024, respectively. In 2025, the Company repurchased 9.4 million shares of common stock under the 2019 Plan at an average price per share of $67.42 ¹⁶, for a total cost of $634 million ¹⁷. As of December 31, 2025, the Company had $6.2 billion ¹⁸ in unused backup lines of credit for general corporate purposes. The Company's cash, cash equivalents, short-term investments and marketable securities totaled $15.8 billion ¹⁹ as of December 31, 2025.

The Company faces unfavorable general economic and geopolitical conditions that could negatively impact financial results. Many jurisdictions in which products are sold have experienced unfavorable changes in economic conditions, which could negatively affect the affordability of, and consumer demand for, beverages. Certain markets experienced high rates of inflation throughout 2025, which may continue in 2026. The Company faced disruption to its operations due to international conflicts throughout 2025. Geopolitical instability has led to logistical, transportation and supply chain disruptions; business disruptions; increased risk of cybersecurity incidents; reduced availability and increased costs of transportation, energy, packaging, raw materials and other input costs; and heightened security risk. At times, the Company has faced product boycotts resulting from political activism, which have reduced demand for products. The Company expects inflationary pressures on certain input and other costs to continue to impact its business in 2026.

The Company is subject to various legal and regulatory risks. The Company is currently in litigation with the IRS for tax years 2007 through 2009. On August 2, 2024, the Tax Court entered a decision reflecting additional federal income tax of $2.7 billion for the 2007 through 2009 tax years. With applicable interest, the total liability for the 2007 through 2009 tax years resulting from the Tax Court's decision is $6.0 billion, for which the IRS issued the Company invoices on September 3, 2024. The Company paid those invoices on September 10, 2024, which stopped interest from accruing on the additional tax due for the 2007 through 2009 tax years. The Company estimates that the potential aggregate remaining incremental tax and interest liability for the tax years 2010 through 2025 could be approximately $14 billion as of December 31, 2025. The Company currently projects the continued application of the Tax Court Methodology in 2026, assuming similar facts and circumstances as of December 31, 2025, would result in an incremental annual tax liability that would increase the Company's effective tax rate by approximately 3.5%. The Company is also subject to various environmental protection statutes and regulations, and ongoing concern over climate change is expected to continue to result in additional legal or regulatory requirements designed to reduce or mitigate the effects of carbon dioxide and other greenhouse gas emissions, to discourage the use of plastic materials, to limit or impose additional costs on commercial water use due to local water scarcity concerns, or to expand disclosure of certain sustainability metrics.

The Company is currently in litigation with the IRS for tax years 2007 through 2009, with the Tax Court entering a decision reflecting additional federal income tax of $2.7 billion ²⁰ for those years and a total liability including interest of $6.0 billion ²¹. The Company estimates that the potential aggregate remaining incremental tax and interest liability for tax years 2010 through 2025 could be approximately $14 billion ²² as of December 31, 2025, and the continued application of the Tax Court Methodology in 2026 would increase the effective tax rate by approximately 3.5% ²³. The Company faces significant foreign currency exchange rate risk, having derived $28.8 billion ²⁴ of net operating revenues from operations outside the United States in 2025, with fluctuations in foreign currency exchange rates unfavorably impacting consolidated operating income by 12% ²⁵ in 2025. The Company is exposed to commodity price volatility, with raw materials including sucrose, high fructose corn syrup, aspartame, and other ingredients subject to price fluctuations, and the Company expects inflationary pressures on certain input and other costs to continue to impact its business in 2026. The Company relies on independent bottling partners for a significant portion of its business, with one bottler accounting for 10% ²⁶ of net operating revenues in 2025, and the deterioration of a major bottling partner's financial condition could adversely affect net operating revenues and equity income. The Company faces risks related to obesity and other health-related concerns that may reduce demand for sweetened beverages, and the Company is subject to various legal requirements including Proposition 65 in California, which could require warning labels on products if certain substances are detected.

Management's message emphasizes that the Company is well positioned to create value for the Company and its stakeholders despite the dynamic world in which it is currently operating. Management is focused on the following growth pillars: shaping a portfolio of loved brands; transforming marketing and innovation agenda; optimizing the Coca-Cola ecosystem; building talent and capabilities; and enhancing license to win. Management believes that improved productivity is essential to achieving long-term growth objectives and, therefore, a leading priority of the Company is to design and implement the most effective and efficient business model possible. Management believes that people are the most important asset, and the Company strives to attract and retain high-performing talent. Management states that the Company's vision has three connected pillars: Loved Brands, Done Sustainably, and For a Better Shared Future. Based on current spot rates and hedging coverage in place, management expects foreign currency exchange rate fluctuations will have a favorable impact on full year 2026 net operating revenues. Management expects the effective tax rate in 2026 to be approximately 20.9%, before considering the potential impact of any significant operating and nonoperating items. Management expects 2026 capital expenditures to be approximately $2.2 billion ²⁷. Management expects net periodic pension cost to be approximately $87 million ²⁸ in 2026. Management expects to contribute approximately $27 million ²⁹ in 2026 to pension trusts.