Spencer Jakab takes a look at Coca-Cola’s consistent sales growth and likes what he sees. The most striking point in the article is that despite how ubiquitous Coke and Coke products seem to be, there’s plenty of apparent room for growth. On average in 2010, Coke sold 89 beverages per person around the world. But in the good old United States, the number’s 394. In superstar Mexico it’s 625. Even if you look at a market like France, where Coke is a mature product and they haven’t been successful in replicating anything close to their North American sales, they sell 143 per capita—a huge increase over the global average.
That all strongly suggests that Coke’s relatively weak global performance is driven first and foremost by the fact that tons of people live in low-income countries like China and India where people are disinclined to drop precious cash on what amounts to sugary water. But the third world is getting richer fast, and as incomes converge and soda gaps narrow Coke is extremely well-positioned to take advantage of that global growth.
Coke also turns out to be a good example of one of my favorite phenomena—people just trying to run normal businesses who have reason to take advantage of the existence of “useless” speculators. Jakab notes that “currency fluctuations are likely to be a drag on operating income in the fourth quarter, after boosting it by 6% in each of the last two periods.” Getting better at hedging these kinds of risks away can be useful for every business, from gourmet cheese shops to Starbucks and beyond, but it turns out to be pretty hard to pull off perfectly. Doing it at all requires the existence of a big and liquid market in currency speculation so that all the different kinds of firms operating “real” businesses have a pool to buy and sell into.