Stock Analysis & Valuation Coca-Cola Europacific Partners PLC (CCEP.L)

• Previous Close: £6,650.00
• Sector Valuation Confidence Level: Low

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	2184.90	-67
Intrinsic value (DCF)	2468.99	-63
Graham-Dodd Method		n/a
Graham Formula	52.10	-99

Strategic Investment Analysis

Company Overview

Coca-Cola Europacific Partners PLC (CCEP.L) is a leading producer, distributor, and seller of non-alcoholic ready-to-drink beverages, serving approximately 600 million consumers across Europe and the Asia-Pacific region. Headquartered in Uxbridge, UK, the company operates under a franchise model with The Coca-Cola Company (KO), offering a diverse portfolio of iconic brands such as Coca-Cola, Fanta, Sprite, Monster Energy, Schweppes, and Costa Coffee. CCEP's product range includes carbonated soft drinks, energy drinks, waters, juices, teas, and coffee beverages, catering to evolving consumer preferences for healthier and functional drinks. With a strong presence in key markets, including Western Europe and Australia, the company benefits from scale advantages in production, distribution, and marketing. As a publicly traded bottler, CCEP plays a critical role in Coca-Cola’s global system, combining operational efficiency with brand strength in the competitive non-alcoholic beverage sector.

Investment Summary

Coca-Cola Europacific Partners PLC presents a stable investment opportunity within the consumer defensive sector, supported by its strong brand portfolio, extensive distribution network, and long-term partnership with The Coca-Cola Company. The company’s diversified product mix and geographic footprint mitigate regional risks, while its focus on premiumization and sustainability aligns with consumer trends. However, investors should consider exposure to inflationary pressures, regulatory risks (e.g., sugar taxes), and high leverage (total debt of £11.3 billion). With a market cap of £30.4 billion, a beta of 0.61 indicating lower volatility, and a solid dividend yield, CEP is suited for income-focused investors seeking defensive exposure. Operational cash flow (£3.1 billion in FY 2023) supports continued capex and shareholder returns, but margin pressures from input costs remain a monitorable risk.

Competitive Analysis

Coca-Cola Europacific Partners holds a competitive advantage as one of the largest independent Coca-Cola bottlers globally, benefiting from exclusive rights to produce and distribute Coca-Cola brands in its territories. Its scale enables cost efficiencies in manufacturing and logistics, while its direct-to-store delivery model strengthens retailer relationships. Unlike pure-play beverage companies, CCEP’s franchise model reduces R&D and marketing risks, as innovation is primarily driven by The Coca-Cola Company. However, the company faces intense competition from PepsiCo (PEP) in key markets, where brand loyalty and pricing power are critical. Smaller regional players and private-label brands also pressure margins in commoditized categories like bottled water. CCEP’s focus on premium brands (e.g., Costa Coffee, smartwater) and healthier options (e.g., Honest Tea) differentiates it from rivals, but reliance on carbonated soft drinks (~50% of revenue) exposes it to secular declines in sugary beverages. Its acquisition of Coca-Cola Amatil in 2021 expanded its Asia-Pacific footprint, providing growth optionality but also integration risks.

Major Competitors

• PepsiCo Inc. (PEP): PepsiCo is CCEP’s primary global competitor, with a broader portfolio including snacks (Lay’s, Doritos) and beverages (Pepsi, Gatorade). Its direct ownership of brands (vs. CCEP’s franchise model) provides greater control over innovation and margins. However, PepsiCo lacks CCEP’s exclusive regional focus in Europe, where CCEP’s distribution scale is unmatched. PepsiCo’s stronger presence in emerging markets offsets CCEP’s dominance in Western Europe.
• Dr Pepper Snapple Group (DPSGY): Now part of Keurig Dr Pepper (KDP), this competitor holds strong regional brands (Dr Pepper, Snapple) but lacks CCEP’s international reach. Its US-centric model limits direct overlap, though it competes in premium RTD coffee and energy drinks. KDP’s merger with Keurig diversifies its revenue beyond beverages, unlike CCEP’s pure-play focus.
• Fomento Económico Mexicano SAB (FEMSA) (FBHS.L): FEMSA operates Coca-Cola FEMSA, the world’s largest Coca-Cola bottler by volume, with dominance in Latin America. While CCEP leads in Europe, FEMSA’s emerging-market exposure offers higher growth potential but greater volatility. FEMSA’s OXXO retail chain provides a unique vertical integration advantage absent in CCEP’s model.
• The Coca-Cola Company (KO): KO is CCEP’s licensor and a competitor in brand ownership. KO’s direct-to-consumer initiatives (e.g., Coca-Cola Creations) could eventually bypass bottlers like CCEP. However, CCEP’s operational expertise in local markets remains critical for KO’s European growth, creating a symbiotic but occasionally tense relationship.
• Monster Beverage Corporation (MNST): Monster competes directly in energy drinks, where CCEP distributes Monster Energy in Europe. Monster’s independent brand strength and innovation pace challenge CCEP’s owned energy brands (e.g., Burn). CCEP’s distribution leverage offsets Monster’s lack of in-house bottling infrastructure.