Costco ditches Pepsi for Coca-Cola in key food hall supplier, cements legacy of $1.50 Hot Dog Combo – Costco Wholesale (NASDAQ:COST), Coca-Cola (NYSE:KO)

Costco Wholesale Company It costs Announced plans for replacement PepsiCo Beep with Coca Cola Company ko as a beverage supplier to the food court, marking a major shift in the retail giant’s strategy and highlighting Coca-Cola’s growing momentum in the market.

What happened: Change announced by Costco’s CEO Ron Vacris At the company’s annual shareholder meeting, taking effect this summer, Coca-Cola products will return to Costco food courts after a decade-long absence.

“We will transfer our dining hall fountain business back to Coca-Cola,” Vakris said. According to To CNN.

The move comes at a time when Coca-Cola is showing strong growth potential, especially in emerging markets.

The beverage contract, which includes fountain drinks, cups and straws, has been held by PepsiCo since 2013. The switch back to Coca-Cola coincides with analysts’ bullish outlook on the beverage maker.

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Why does it matter?: Piper Sandler analyst Michael Lavery recently initiated coverage of Coca-Cola with an “overweight” rating and a $74 price target, citing the company’s strong position in North America and Latin America, which contribute about 70% of its operating income.

The shift is in line with Costco’s commitment to maintaining its popular $1.50 hotdog and soda combo, a loss leader that sold nearly 150 million units last year. This pricing strategy, unchanged since 1985, remains central to the value proposition to Costco’s customers, despite inflationary pressures affecting other food hall elements.

The return of Coca-Cola to Costco food halls could strengthen its position in the market. The company’s significant exposure to emerging markets, where approximately 68% of the population does not consume commercial beverages, represents a growth opportunity of about 4.5 times the current consumer base, according to a Piper Sandler analysis.

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Disclaimer: This content was produced in part with the help of artificial intelligence tools and was reviewed and published by Benzinga editors.