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Dunkin Brands Deals with Coca-Cola

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What better than to sip Coca-Cola while you relish your favorite doughnuts and ice creams? The recently-announced multi-year agreement of Dunkin' Brands Group, Inc. (DNKN - Free Report) with cola giant The Coca Cola Company (KO - Free Report) has just made that possible.

By virtue of the agreement, Dunkin' Brands’subsidiaries, Dunkin' Donuts and Baskin-Robbins, will be adding Coca-Cola soft drinks to their product line up. Coca-Cola’s popular beverages such as Coca-Cola, Diet Coke, Coke Zero and Sprite will be served in more than 9,400 Dunkin' Donuts cafes and Baskin-Robbins ice cream shops across US. Alongside, Coca-Cola will provide a range of juices, enhanced waters and energy drinks. The Coca-Cola products are expected to be available at all the Dunkin' Donuts and Baskin-Robbins restaurants by August this year. The companies are also planning to enter into marketing and promotional programs to popularize their brands.

Very recently, Coca-Cola announced the opening of its 42nd bottling plant of Coca-Cola in China. The bottling plant will be located at Liaoning and will be the largest production facility of Coca-Cola in the Chinese region. Coca-Cola has already invested approximately $160 million in the Liaoning plant, as part of the company’s $4 billion investment plan in China over the next three years. Currently, Coca-Cola has four production lines already operating under the new plant. Coca-Cola plans to invest in nine production lines at the new facility.

Our Recommendation

We currently have a long-term Neutral recommendation on both Dunkin' Brands Group, Inc. and The Coca-Cola Company. The stocks carry a Zacks #3 Rank (a short-term ‘Hold’ rating).

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