Beverage company Coca-Cola (KO) will launch a new version of Coke made with domestic cane sugar this fall, which will give U.S. customers their first chance to buy it in about forty years. The company switched to high-fructose corn syrup in the 1980s but still sells cane-sweetened Coke in countries like Mexico. This new version will not replace the original but could help sugar growers in Louisiana and Florida. At the same time, it raises concerns about whether U.S. farms can produce enough cane sugar to meet the extra demand.
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In fact, only about 30% of U.S. sugar comes from cane, while the rest is supplied by imports and sugar beets grown in colder regions. If demand for cane sugar grows quickly — especially if other beverage companies follow Coca-Cola’s lead — shortages and higher prices are likely to occur. Interestingly, U.S. cane sugar is already more than twice as expensive compared to the global market because of tariffs, and new tariffs introduced by President Trump could push costs up even further. As a result, analysts say that this could force companies to rely on more imports from countries like Mexico or Brazil, which would add even more pressure to prices.
Nevertheless, Coca-Cola says it is working closely with suppliers and believes that there will be enough cane sugar for the launch. It is worth noting that health concerns over processed foods, raised recently by Health and Human Services Secretary Robert F. Kennedy Jr., are driving interest in alternatives to corn syrup. Indeed, PepsiCo’s (PEP) CEO has hinted that his company might follow consumer trends toward natural sweeteners as well. Even so, analysts warn that this shift might stay small for now as more of a marketing win than a large production change, unless the wider industry also moves away from corn syrup.
Is KO Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on KO stock based on 17 Buys, one Hold, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average KO price target of $79.50 per share implies 15.3% upside potential.
