Coca-Cola (KO) faces potential headwinds as the ongoing Iran War disrupts oil shipments through the Strait of Hormuz, which could increase production and transportation costs for the beverage giant. While Coca-Cola’s capital-light model allows it to maintain strong cash flow and consistent dividends—63 years of annual increases—rising costs may pressure its bottling partners to raise prices, potentially exhausting the company’s pricing power in key markets.
The EMEA region, which accounted for 22.6% of Coca-Cola’s operating revenue in 2025, is particularly vulnerable as higher prices could dampen consumer demand. Additionally, fluctuations in the U.S. dollar could impact overseas revenue, complicating the company’s earnings outlook. Coca-Cola previously projected a 7%-8% EPS growth for 2026, but this guidance may need reevaluation amid current geopolitical tensions.
For investors, the prudent strategy appears to be maintaining positions in Coca-Cola, given its historical resilience and appeal as a defensive stock, even as it navigates these emerging challenges.
Source: fool.com