Executive Summary / Key Takeaways

• Coca-Cola Europacific Partners (CCEP) stands as a formidable force in the global beverage industry, leveraging its expansive reach across 31 markets and an exclusive partnership with The Coca-Cola Company to drive consistent top and bottom-line growth. The company's strategic diversification, particularly into high-growth Asia-Pacific and Southeast Asia (APS) markets like the Philippines, is proving instrumental in offsetting regional headwinds.
• CCEP is actively enhancing its competitive moat through significant investments in technological differentiation, including the S/4HANA platform and AI-driven sales tools like RED One and KAM 360. These innovations are yielding tangible benefits in operational efficiency and market responsiveness, such as a 2% year-on-year improvement in forecasting accuracy in Germany.
• The company delivered a solid first half in 2025, with revenue up 2.5% to €10.3 billion and operating profit increasing by 7.2% to €1.4 billion. Despite a slight adjustment to full-year 2025 revenue guidance (3% to 4% from approximately 4%) due to a slower trajectory in Indonesia, CCEP reaffirmed its profit and cash guidance, targeting approximately 7% operating profit growth and at least €1.7 billion in comparable free cash flow.
• A disciplined capital allocation strategy, including a new €1 billion share buyback program and an annualized dividend payout ratio of around 50%, underscores CCEP's commitment to shareholder returns. The company's return to its target leverage range of 2.5x to 3x EBITDA a year ahead of schedule provides financial flexibility for future growth initiatives and potential M&A.
• Key risks include macroeconomic slowdowns (as seen in Indonesia), intense market competition, and inflationary pressures, particularly in labor costs. However, CCEP's robust brand portfolio, best-in-class execution, and strategic investments position it for sustained midterm growth, with a focus on accelerating quality volume growth in Europe and expanding high-margin categories like Alcohol Ready-To-Drink (ARTD) and energy drinks.

A Global Beverage Powerhouse with a Digital Core

Coca-Cola Europacific Partners PLC (CCEP), with a market capitalization of approximately $40.89 billion, stands as a leading global consumer goods company, making, moving, and selling some of the world's most cherished beverage brands. Operating across 31 countries and serving nearly 600 million consumers, CCEP combines the strength of a multinational enterprise with deep local market knowledge. The company's journey, rooted in its founding in 1904 and marked by its expansion to Coca-Cola Europacific Partners in May 2021, reflects a century-long commitment to growth and strategic evolution. This extensive footprint and strong brand affiliation with The Coca-Cola Company form the bedrock of its competitive advantage in the non-alcoholic ready-to-drink (NARTD) beverage industry.

CCEP's overarching strategy centers on driving sustainable, profitable growth within resilient and innovative consumer categories, including NARTD, Alcohol Ready-To-Drink (ARTD), and hot coffee. The company's ability to consistently deliver value is evidenced by an impressive Total Shareholder Return (TSR) of around 235% since 2016. This performance is underpinned by a dual focus: leveraging its scale for operational efficiency and investing in local market execution and technological innovation.

Technological Edge: Fueling Efficiency and Growth

A critical differentiator for CCEP is its commitment to technological advancement and digital transformation. The company is in the process of aligning its diverse legacy systems onto a new technology platform, S/4HANA. This unification of data and simplification of processes is enabling CCEP to unlock significant value through multi-year investments in technology and artificial intelligence (AI), driving both top-line growth and productivity. Germany is slated to go live with S/4HANA in the second half of 2025.

CCEP's proprietary data-driven field sales tool, RED One, exemplifies its technological edge. This tool equips over 12,000 sales representatives with comprehensive information and analytics to optimize routes, prioritize customer visits, review performance, and tailor actions to specific customer needs. A recent AI-based enhancement to RED One, utilizing image recognition, allows sales teams to dynamically track and record key store measurements, such as the share of visible inventory. Furthermore, KAM 360, used by 850 key account managers, facilitates effective partnerships with customers, enabling joint planning, trade investment optimization, pack price and promotional simulations, and price elasticity modeling. These capabilities are crucial for CCEP's leading revenue and margin growth management. The impact of these technologies is tangible: in Germany, 80% of CCEP's SKUs no longer require human intervention for forecasting, leading to a 2% year-on-year improvement in forecasting accuracy and ensuring more timely and complete deliveries to customers. The company is also piloting a new eB2B platform, "Up We Go," in Spain to simplify ordering and strengthen relationships with partner distributors in fragmented markets. These technological advancements provide a significant competitive moat, enhancing operational efficiency, market responsiveness, and ultimately, financial performance.

Competitive Landscape: A Strategic Positioning

CCEP operates in a highly competitive global beverage market, contending with multinational giants and agile niche players. Its primary direct competitors include PepsiCo , Keurig Dr Pepper , and Monster Beverage .

CCEP's core strength lies in its exclusive bottling and distribution rights for Coca-Cola brands, which provide unparalleled brand recognition and consumer loyalty. This allows CCEP to maintain strong pricing power and efficient market penetration, particularly in Europe and the Asia-Pacific region. In contrast, PepsiCo (PEP) offers a more diversified portfolio, including snacks, which provides greater revenue stability and a buffer against beverage market downturns. While PepsiCo's broader diversification may lead to more robust cash flow generation and higher overall margins in volatile markets, CCEP's deep integration with the Coca-Cola system enables faster innovation cycles in beverage-specific areas.

Against Keurig Dr Pepper (KDP), which focuses on convenient, single-serve products and health-oriented drinks, CCEP leverages its established infrastructure for widespread distribution. While KDP's innovative formats may see faster adoption in convenience-driven segments, CCEP's scale and market positioning in Europe support better market share capture and potentially lower operating costs in traditional channels.

In the rapidly growing energy drink category, CCEP's Monster brand is a formidable player. Monster's phenomenal first half of 2025, with volumes up nearly 15% and a 140 basis points gain in retail value share, demonstrates CCEP's ability to compete effectively against specialized energy drink companies like Monster Beverage (MNST) and Red Bull. CCEP's extensive distribution network and strategic cooler placements (aiming to add over 100,000 in 2025) provide a significant advantage in market penetration and visibility. While MNST's agility in product development is a strength, CCEP's broader brand ecosystem allows for cross-selling opportunities and a more diversified approach to consumer needs.

CCEP's customer relationships are a key competitive asset, consistently ranking as a top-tier supplier in Advantage surveys. The company's focus on creating customer value, adding over €1 billion to its retail customers in 2024, and its ability to secure new customer wins like Kinopolis in Spain and Costco Wholesale (COST) in Australia, further solidify its market position.

Financial Performance: Resilient Growth and Disciplined Returns

CCEP's financial performance in the first half of 2025 demonstrates its resilience and strategic effectiveness. The company reported revenue of €10.3 billion, an increase of 2.5% compared to the first half of 2024. This growth was supported by a strong revenue per unit case increase of 3.8%, reflecting positive headline pricing and effective promotional optimization. Comparable volumes, adjusted for selling days, were marginally up by 0.3%, despite a challenging macroeconomic environment in Indonesia which impacted group volumes by approximately 1% in Q2 2025. Excluding Indonesia, volumes in the first half were up around 1%.

Operating profit for H1 2025 reached €1.4 billion, growing by 7.2%, leading to an operating margin expansion of approximately 60 basis points to 13.5%. This profitability was driven by strong top-line performance and the successful execution of efficiency programs. Cost of sales per unit case increased by 3.6%, primarily due to higher concentrate costs from the incidence pricing model and increased soft drinks taxes. However, this was largely a phasing effect, with benefits expected in the second half from the conclusion of the Beam Suntory relationship in Australia. Operating expenses as a percentage of revenue improved by 50 basis points to 21.8%. Comparable diluted earnings per share (EPS) for H1 2025 was €2.02, up 3.1% on an FX-neutral basis.

For the full year 2024, CCEP delivered revenue of €20.7 billion, an increase of 3.5%, with operating profit growth of 8% to €2.7 billion. The company generated an impressive €1.8 billion in comparable free cash flow, enabling it to return to its target leverage range of 2.5x to 3x EBITDA a year ahead of schedule. This strong cash generation supports CCEP's disciplined capital allocation framework, which includes an annualized dividend payout ratio of around 50% and a new €1 billion share buyback program announced in February 2025, with approximately €460 million already completed in H1 2025 [cite: 6-K filings].

Strategic Initiatives and Outlook

CCEP's strategic initiatives are designed to sustain its growth trajectory. The company's current efficiency program is ahead of schedule, aiming to deliver between €350 million and €400 million in savings by 2028 through network optimization, production consolidation, and leveraging shared service capabilities, including a new integrated shared service center in Manila.

The outlook for 2025, while acknowledging some near-term headwinds, remains confident. CCEP reaffirmed its full-year profit and cash guidance, targeting approximately 7% operating profit growth on an FX-neutral basis and at least €1.7 billion in comparable free cash flow. Full-year revenue growth is now projected to be in the range of 3% to 4%, a slight adjustment from the previous "approximately 4%" due to the slower trajectory in Indonesia. The company anticipates volume growth for the full year, particularly in Europe and APS, despite the challenges in Indonesia. This outlook factors in a higher effective tax rate of 26% and increased non-controlling interest, reflecting the positive performance of the Philippines business. CCEP also anticipates a full-year FX headwind of approximately 150 basis points to revenue and almost 200 basis points to operating profit based on current spot rates.

Key growth drivers for the balance of 2025 and beyond include:

• Brand Innovation: New flavors for Coca-Cola Original Taste and Zero Sugar, the "This Is My Taste" campaign for Diet Coke, and expanded flavor extensions for Fanta.
• Category Expansion: Continued strong performance in energy drinks (Monster volumes up nearly 15% in H1 2025) and significant expansion in the ARTD category with new variants like Absolut Sprite and the launch of Bacardi and Coca-Cola. In Australia, CCEP holds a solid #2 position in ARTD with around 20% share.
• Market-Specific Growth: The Philippines continues to be a standout, delivering double-digit volume growth and approximately 200 basis points of operating margin expansion in 2024. CCEP is accelerating CapEx in this market to support further growth. In Indonesia, despite macroeconomic softness and geopolitical impacts (leading to a €175 million impairment charge in 2024), CCEP is transforming its route-to-market and introducing refillable glass bottles to unlock long-term potential.

• Operational Excellence: Continued investment in cooler placements (over 100,000 new coolers planned for 2025) to increase cold drink space and enhance in-market execution, supported by the largest sales force in FMCG.

Risks and Challenges

Despite a robust outlook, CCEP faces several pertinent risks. The macroeconomic slowdown and geopolitical events in Indonesia have significantly impacted volumes, leading to a non-cash impairment charge in 2024. While stabilization is observed, the long-term recovery trajectory remains subject to external factors. The European market, while resilient, is highly competitive, with aggressive promotional pricing from some competitors, particularly in Great Britain. CCEP's multi-year view on pricing and promotional strategies aims to mitigate this, but sustained pressure could impact margins. Inflationary pressures, especially in labor costs, are expected to continue into 2025, although CCEP's hedging strategy (over 90% hedged for 2025 commodities, 60% for 2026) provides some insulation. Adverse weather conditions, as experienced in Europe in 2024, can also impact away-from-home volumes. Additionally, the company's reliance on licensed brands means its success is intrinsically linked to the brand strategies and performance of The Coca-Cola Company (KO) and other brand partners.

Conclusion

Coca-Cola Europacific Partners is a compelling investment story, characterized by its strategic diversification, operational excellence, and a clear commitment to shareholder value. The company's ability to deliver solid financial performance, even amidst regional challenges and a dynamic competitive landscape, underscores the strength of its business model and the effectiveness of its strategic initiatives. CCEP's significant investments in technological differentiation, from its S/4HANA platform to AI-driven sales tools, are not merely operational enhancements but foundational elements of its competitive moat, driving efficiency, market responsiveness, and ultimately, profitable growth.

While macroeconomic headwinds in markets like Indonesia and persistent competition in Europe present ongoing challenges, CCEP's proactive approach to market development, brand innovation, and disciplined capital allocation positions it for sustained success. The reaffirmed profit and cash guidance for 2025, coupled with an ambitious share buyback program, reflects management's confidence in its ability to generate robust returns. For discerning investors, CCEP offers a blend of stability from its core European markets and high-growth potential from its APS segment, all underpinned by a technological roadmap designed to enhance its leadership in the global beverage industry.