Launches of healthy and refreshing beverages to meet rising demand in the summer is driving the non-alcoholic beverages industry’s growth. As such, we think two prominent players in this space, Coca-Cola (KO) and Starbucks (SBUX), should benefit from the industry tailwinds. But let’s find out which of these stocks is a better buy now. Read on.The Coca-Cola Company (NYSE:KO) in Atlanta, Ga., is the world’s largest beverage company, while Starbucks Corporation (NASDAQ:SBUX) in Seattle, Wash., is a growing company in this space. KO owns or licenses and markets beverage concentrates, finished sparkling soft-drinks brands, enhanced water, juice, and syrups to fountain retailers and wholesalers worldwide. Whereas SBUX operates as a multinational chain of coffeehouses where it retails, roasts, and provides its own brand of specialty coffee. It also produces and sells bottled coffee drinks and a line of ice creams.
Amid a strong vaccination drive, which is facilitating increasing foot traffic at restaurants and tourist places, the demand for fresh and healthy beverages is very high this summer. This, along with rising consumer spending, is driving the sales of non-alcoholic beverage companies. These companies’ efforts to develop healthy consumables, to keep pace with the changing consumer tastes, are also driving their growth. The non-alcoholic beverages market is expected to grow at an 8.2% CAGR to $1.73 trillion by 2028. And due to the very high barriers to entry in the beverage industry, both KO and SBUX should benefit from the industry tailwinds based on their widespread distribution networks.
While KO gained 5.4% over the past month, SBUX has surged 11.5%. SBUX is a clear winner with 64.8% gains versus KO’s 18.1% in terms of the past year's performance. But, which of these stocks is a better pick now? Let’s find out.