Coca-Cola’s outlook is getting a big boost from the gym bros
Fairlife is poised to drive more and more sales growth for Coca-Cola, Morgan Stanley says.
A pillar for the long-term success of traditional fizzy soft drink seller Coca-Cola is coming from an unexpected source: gym bros.
The Fairlife brand, acquired by Coca-Cola in 2020, is a favorite among fitness enthusiasts and features prominently in many recipes posted by (predominantly) male influencers online, thanks to its higher protein content. Its milk is also lactose-free.
(Disclosure: the author of this piece is deeply, deeply Fairlife-pilled.)
Morgan Stanley analyst Dara Mohsenian, who has an overweight rating and $81 price target on the stock, wrote that Fairlife has driven about 60% of Coke’s growth year to date in the US, based on Nielsen scanner data.
“If we had to choose two words behind Coke’s large stock outperformance in recent years, ‘Coke Zero’ would be only behind ‘James Quincey’ and ‘Pricing Power,’ highlighting the importance of Coke’s innovation shift to healthier (no calorie) products in its growth profile,” he wrote. “We expect ‘Fairlife’ to be added to this health shift going forward as an important stock driver, with Fairlife alone driving a significant 100-140 basis points of organic sales growth in the next five years even absent any assumed international contribution.”
Fairlife’s products are in categories that are growing relatively fast, and it’s picking up market share in all of them, Mohensian added.
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