Coca-Cola has long been a staple in investment portfolios, particularly for Warren Buffett and his company, Berkshire Hathaway. Since the late 1980s, Buffett’s faith in the Georgia-based beverage titan has served as a case study in long-term investing. As of now, Coca-Cola remains a well-known entity, but whether it is a suitable buy in today’s market is a matter of ongoing debate.
Coca-Cola: A Historical Perspective
Warren Buffett’s relationship with Coca-Cola began in 1988 when Berkshire Hathaway made its initial investment, accumulating over $1 billion in shares by 1989. This substantial stake represented more than 6% of the company at the time. Today, that investment has matured into a holding of 400 million shares, valued at over $28 billion. Coca-Cola’s consistent stock buybacks have bolstered Berkshire’s percentage ownership to around 9% of the company.
As Coca-Cola prepares to announce its financial results for the third quarter of 2025, a reevaluation of its stock in the current market context is warranted. As of now, Coca-Cola’s stock sits around $69.71, reflecting a market cap of $300 billion. Recent performance metrics include a modest 5% year-over-year revenue growth, with a gross margin of 61.55% and a dividend yield of 2.8%.
The Case Against Coca-Cola Today
While Coca-Cola has many redeeming qualities, potential investors should consider its recent performance. Over the last 20 years, Coca-Cola has underperformed the S&P 500, averaging only 5% year-over-year growth—a figure insufficient to drive substantial gains for investors. This underperformance raises questions about the stock’s potential as a solid investment in today’s increasingly competitive beverage market.
Despite this, Coca-Cola offers benefits that attract dividend-focused investors. The company has raised its dividend consistently for over 60 years, placing it among the esteemed Dividend Kings. However, the current 2.8% yield may not be compelling enough for investors seeking better returns.
The Competitive Landscape
In reviewing Coca-Cola, it’s essential to look at emerging brands that may offer enhanced growth potential. One such company is Celsius Holdings, a fast-growing name in the energy drink sector. Founded in the early 2000s, Celsius is on a trajectory that resembles Coca-Cola’s earlier market expansions, seeking new growth channels particularly in international markets.
Celsius generated nearly $1.3 billion in revenue in North America in 2023, with trailing-12-month revenue reaching around $1.6 billion. Additionally, forecasts suggest Celsius could see its international revenue climb from approximately $75 million in 2024 to over $100 million in 2025. This ambitious growth plan aims to capitalize on untapped markets, setting the stage for a significant expansion trajectory.
Celsius faces its own challenges, such as competition not only from established giants like Coca-Cola but also direct competitors like Monster Beverage. However, much like how Buffett saw Coca-Cola’s growth potential through internationalization, investors might consider Celsius as a stock with a promising upturn—especially if it successfully navigates the cutthroat beverage landscape.
A New Direction: Using Buffett’s Wisdom
Buffett’s insightful analysis in his 1989 letter to shareholders highlighted Coca-Cola’s ability to harness international growth after saturating the U.S. market. Today, emerging companies like Celsius are at a similar crossroads as they too strive for growth beyond North America.
Investors in today’s market should take a page from Buffett’s playbook: seek businesses with the ability to grow in international markets or capture evolving consumer interest. This perspective might lead investors to consider companies like Celsius, potentially offering better returns relative to Coca-Cola.
Conclusion
In evaluating Coca-Cola’s status as a buy in today’s market, it becomes clear that while the brand remains iconic and its dividends attractive, the company’s growth has stagnated compared to the broader market. For those looking for superior growth opportunities within the beverage sector, it may be worthwhile to explore other options like Celsius, which mirrors some of the traits that once made Coca-Cola a fantastic investment prospect. As the beverage industry continues to evolve, keeping an eye on companies that capture international momentum may yield better returns for discerning investors.
