Coke Reliant on North America

Coca-Cola Enterprises Inc. (CCE - Analyst Report) operates in the soft drink beverage industry and is the world's largest bottler of Coca-Cola beverages. The company serves more than 400 million customers across North America and Europe. Coca-Cola Enterprises operates under agreements with The Coca-Cola Company (KO - Analyst Report), with exclusive rights to manufacture and sell Coke products in specified containers within specified territories.

The maturing carbonated beverages category has resulted in management announcing a strategic restructuring program emphasizing the growth categories of non-carbonated beverages and low calorie sodas. The plan should mitigate the impact of higher input costs due to increases in the prices of aluminum cans and high fructose corn syrup.

However, the weak economic environment in North America and subsequent softer-than-expected volume are very concerning. Despite the stock being in the lower end of the historical valuation range, the Hold recommendation is being maintained until there are signs of stabilization in North America.

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