Coke's New Drink & Pepsi's Updated Outlook

Includes: KO, PEP
by: Robert Zenilman

Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:

Pepsi Raises Full-Year Profit Outlook and Coke's Enviga: It May Burn Calories, But It Isn't a Cure for a Bulging Belly [Wall Street Journal]

Summary: Coke has introduced Enviga, a “calorie burning” green tea soft drink. Coke claims that drinking three 12 oz. Envigas over a 24 hour period will burn off 60-100 calories. To put it in perspective, if you drink one can of Coke, you will need to drink 7.3 cans of Enviga to burn off the regular Coke’s calories (assuming a 20 calorie loss per can, the low end of the range). At $1.29 - $1.49 per can of Enviga, this will set you back at least $9.42. Burning off the calories contained in a 10 oz. sirloin will cost over $34 ( a little over 26 cans). Although nutritionists question whether drinking 3 cans of Enviga a day is worth it, Coke’s chief scientist promotes Enviga as a “gentle boost” to a healthy lifestyle. In other beverage market news, Pepsi raised their full year profit forecast to at least $2.98/share, $0.05 higher than their previous forecast. This comes after Pepsi shares came under pressure following the release of their results for the last quarter. Analysts were concerned that soda sales fell by 2% and that Pepsi’s North American drinks division saw its operating profit drop by 4%. Profits were squeezed by both higher orange prices and higher production costs for its Gatorade sports drink. Related: orange juice futures hit a 16 year high yesterday after the Agriculture Department announced that the 2006-2006 orange crop is estimated to be lowest since the 1989-1990 season.
Related Links: Coke Introduces Calorie-Burning Enviga DrinkCoca Cola's Dilemma: Company Suing its Former General CounselPepsi Markets Healthy Alternatives to Inner City KidsMilk a Substitute for Cola in China? • BusinessWeek: Lawyer: Throw out Coke case wiretaps • Forbes: Cola Makers Get A Break In India
Potentially impacted stocks and ETFs: National Beverage (FIZ), Cadbury Schweppes (NYSE:CSG), Hansen Natural (HANS), COTT (NYSE:COT). ETF: iShares Dow Jones US Cons Goods (NYSEARCA:IYK).

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