Chapter 1808 Transformation of Coke

As for the real estate issue, I think we should think about it~"

After Yang Cheng thought about it for a long time, he said this, which surprised Uncle Ou. Your family is engaged in real estate. As the heir, you actually have concerns about real estate. Can you spread the word?

After scanning the employees a few times, Uncle Ou decided to tell the truth, "Are you not optimistic about real estate investment?"

Yang Cheng shook his head, "No, no, I just think now is not a good time to invest in real estate."

Uncle Ou looked serious and stood up straight, "Can you explain me?"

“If you are planning to invest in real estate in the UK or other overseas countries, then I would recommend that you investigate before investing. But for US real estate, I don’t think it is necessary to investigate.

On this point, I agree with the old stock god. Buying a house in the United States is only suitable for long-term holding, not short-term speculation.

Whether it is the rental rate of return or the potential for appreciation, the U.S. real estate market has reached its ceiling, and it is difficult to perform any more amazingly. As for stable value-preserving properties, I just feel that U.S. real estate is the most unsafe type.

This is also the reason why our family started building houses by itself and now engages in capital operations and rarely develops projects personally. "

Uncle Ou understood what Yang Cheng meant, spread his hands and said, "Since you are not optimistic about US real estate, then go to other countries to look for opportunities? Also, do you think US treasury bonds can be invested?"

Yang Cheng smiled, "I'll tell you all the jokes. Buffett advises retail investors not to invest in U.S. Treasury bonds, and he is now the largest trader of short-term U.S. Treasury bonds."

"You mean you can invest in short-term Treasury bonds?"

"Yes, forget about long-term national debt. I would rather buy 10 billion gold and put it in the vault. As long as no one dies, gold's value-preserving property will still exist."

Uncle Ou laughed and said, "According to what you said, we don't need to think about anything else. Let's just buy gold. Of course, we must find a safe storage place for the gold!"

Lin Jian waved his hand, "This is something you should consider. It is your job to rationalize asset allocation. You have to make a plan on how to allocate assets. However, my suggestion is to ensure that the share shares of several major stocks remain unchanged and appropriate. After increasing your holdings, you can disperse the remaining funds and invest some in gold, real estate, and government bonds, but not too much.”

Uncle Ou sighed, "Okay, I'll think about this again~"

After a pause,

"in addition..."

He looked at the employees of the foundation again, and it was obvious that they had personal matters to talk about.

Yang Cheng said, "We'll discuss private matters later. Is there anything else I want to know?"

"Coca-Cola's stock has been very unstable recently. It has experienced the largest single-day declines several times before. Although there was a correction just one day later, this inevitably aroused investor suspicion."

"What's the reason for the sharp drop?" Yang Cheng asked.

"Because of the financial report, although Coca-Cola is still profitable and has high profit margins, the decline in revenue is an indisputable fact."

"Revenue decline?" Yang Cheng was surprised. He really hadn't paid attention to Coca-Cola news recently.

"Yes, the full-year revenue is expected to drop by about 10%~"

"Where's the profit?"

"Net profit is still close to US$2 billion~"

Yang Cheng was surprised, "Revenue has dropped, but net profit is still rising?"

“It’s really weird~”

"Isn't this the first time?" Yang Cheng asked again.

"Yes, a similar phenomenon happened in the past few years, but because their profits were very stable, it was not reflected in the stock price."

"what happened?"

"There are rumors that Coca-Cola is preparing to transform~"

Yang Cheng was dumbfounded, "What? Transformation? Are they crazy? Besides, how can Coke transform? Could it be that they also want to imitate entertainment companies and build a Coca-Cola theme park?"

Uncle Ou waved his hand, "No, no, it's not a business transformation. In fact, since 2012, the sales of carbonated soda, which accounts for more than 70% of Coca-Cola beverage sales, has begun to decline in the European and American markets.

Sales of carbonated drinks in the Asia-Pacific market, which has always performed well this year, have also stopped growing. Faced with this situation, Coca-Cola cannot remain indifferent.

It is unrealistic to place hopes on the growth of the carbonated beverage market. Increasing profits may only rely on reducing costs, which is why this strange phenomenon occurs. Revenue is declining, but profits are growing in reverse. "

An employee answered, "Indeed, we have received news that Coca-Cola has begun to divest its bottling business, and the sale and transfer of related assets are in progress in secret."

Why did revenue decline but net profit rise? The answer is simple, it is related to the production chain of carbonated drinks.

Carbonated drinks such as Coke are generally produced according to this process: carbonated drink companies such as Coke are responsible for producing Coke puree with a mysterious formula, and then sell the Coke puree to bottling companies, which then fill it into finished Coke and distribute it to various consumers. channel.

In comparison, the cost of plant and equipment in the second half of the bottling business is higher, and the gross profit margin is relatively low. If we only focus on the production and sales of Coke puree, which has a much higher gross profit margin, the overall profit margin will increase accordingly.

As a result, the Coca-Cola Company began to gradually franchise the bottling business it controlled to some uncontrolled bottling plants, which was equivalent to reducing the shipment of self-produced whole bottles of beverages.

The direct impact of switching from independent production to cooperative production of end products is a reduction in income.

To put it bluntly, it used to be a direct-operated store, but now you can join it, just like joining K and M, except that when you join Coca-Cola, you invest in a bottling plant, and you cannot sell Coke directly to customers, but distribute it to dealers. purchase.

In short, the bottling plant is the link with the largest workload and the smallest profit in the entire Coke production chain. It would not be a pity to cut it down. Coke does not have to worry about its products being used counterfeitly. After all, this brand is too famous, and other brands The only result of counterfeiting is death.

However, this is only a temporary solution rather than a permanent solution. Reducing costs and increasing profits can only postpone the arrival of the crisis. It is like the sunset before the sunset. It looks beautiful, but after the sunset, there is a long and endless night.

Therefore, if Coca-Cola wants to completely solve the crisis, it must make more responses. Just as capitalists like to diversify investments and rationalize asset allocation, consumer goods and even technology companies are faced with the problem of how to diversify their products.

In this regard, Pepsi, Coke's old rival, has done well. Although, like Coca-Cola, Pepsi's beverage business has also suffered a decline in recent years, Pepsi's snack foods such as Lay's, Cheetos, and Doritos have helped Pepsi stabilize. After performance, this is a relatively stable income, just like the beverage business, it has become a two-day thick leg supporting Pepsi!

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