Compound growth with and without Coca Cola

Compound growth with and without Coca Cola

 

coca-cola-462776_1920

I’m dedicating this effervescent article to someone who shall go unnamed, but whose name is a palindrome, and whose palate has an affinity towards Diet Coke.  Like many American’s, he can drink the fizzy beverage til it’s going out of style-much like bell-bottom jeans; but fortunately for the Coca Cola company the magical carbonated elixir has done the exact opposite; it has permanently permeated throughout the fabric of our lives.  It’s become so standard that some folks refer to soda pop simply as coke, like the word Kleenex is used for tissue.  The red background and white cursive letters are recognizable from afar I’d wager it is available to purchase in just about every corner of the world, even polar bear families get their black footed paws on it!

I cannot and will not argue that imbibing a cold Coke on a hot summer’s day isn’t refreshingly satisfying; enough so that even a thirsty mime would vocalize a post gulp, “Ahhhhhhh!” (of pleased content) Despite the approval of polar bears, mimes, and the majority of humans the highly fructosed corn syrupy drink when consumed in excess can be detrimental to our health and also one’s financial future.  This conclusion which I hope to illustrate should be applied to all sweetened (naturally or artificially) beverages when the proportion of said drinks dramatically tips the scale opposite water.  I’m singling out Coca Cola, simply for brand recognition and it’s lengthy presence on the New York Stock Exchange.

gallonssodapercapita

Americans drink per capita 40 gallons of soda per year, according to a NPD study, the number had declined from its peak of 53 gallons in 1998.  Drinking excess amounts of soda increases your risk for diabetes, heart disease, dental decay, obesity, fatty liver all increase.  Kids in particular are more vulnerable to the negative effects from sweetened drinks, because they often have no other choice, than to drink the beverages available in their parents refrigerators or the bottles of juice placed in their mouths.  Consumption of high quantities of sugar affects their brain chemistry and sets them up for a lifetime of soda consumption.  In stark contrast adequate water consumption improves health;   helps with weight loss, improves kidney function, strengthens teeth, helps with digestion, and prevents dehydration during time of illness.

It turns out that Coca Cola, Pepsi, and their soda peers aren’t as cheap as water (chew on that profound statement-not literally, because that would be silly trying to masticate liquid/fluid).  While the price varies widely, depending on where you buy it, what sales are going on, what coupons you use (good on you), who buys it for you (thanks mom!) the overall average price has steadily increased, just as it does for all consumer goods.  Below is the average cost obtained from  data published in the Daily Record [Morristown, New Jersey] newspaper advertisement section.

circular2price-of-coca-cola-40-years-table

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



To determine the actual cost of Coca Cola on a strictly financial standpoint on one’s bank account, ignoring any health related expense you would later incur due to your heavy consumption; we are going to purchase stock in the Coca Cola Company with the money we would have otherwise spent on the actual beverage.  We will take into account the cost of the Coke product itself along with the cost of a single share going back 5, 10, 20, 30 and 40 years.  We will do this for various volumes of coke consumed; because this obviously varies between individuals and families, and it determines the amount of money actually spent on this “bad habit” in a household.  We will look at a variety of of types of Coca Cola consumers; for example ones that drink a 12 oz can a day purchased in bulk 12 packs, a 20 oz bottle purchased at the corner 7-eleven or office vending machine, or your family drinks a 12 pack combined per day.

Feel free to extrapolate on the data if you drink coke at a different rate or purchase it at a different price or if you started drinking or plan to drink coke for a different time period.  (If by chance you work at the coca cola bottle distributor, get all the coke you can carry for free and rather than drinking it you occasionally bathe in it for exfoliation purposes, then ignore everything including the paragraph about health side effects, you sir have the best of both worlds.)

cokebath

DATA/RESULTS:

coke510203040-bigger-table

Someday I’ll fix my table sizes, until I accomplish that task, you can pull out a magnifying glass, or you can hold down the “ctrl” key and press the “+” key at the same time.  According to the NPD Group (market research company) which calculated the average consumption of Soda per capita (see chart above), a single person who bought strictly 12 packs of coke to fill their yearly 40-53 gallon quota, would have otherwise saved around $110,000.00 over the past 40 years by instead investing in Coca Cola shares.  That’s one person buying the cheapest Coca product possible.  As you can see from the table, a family could easily lose out on $1,000,000.00 plus if their Coca Cola (soda) habit involves buying fountain drinks with meals when eating out and drinking a regular amount in the home.

The left side of the table breaks down the amount you spend on Coca Cola (or any soft drinks for that matter) per day and per week.  If for example your family doesn’t literally drink a 12 pack of soda per day, but as a family you spend roughly $3.99 per day or $27.93 per week you can still use the last row to represent your Coca Cola spending.  To get the $3.99/day figure perhaps you frequently buy coke at the gas station,  and you each buy a soda with your meal at your favorite fast casual restaurant, and you also always have  a supply of soda at home in the fridge.  I encourage you to think back to determine how much you spend on soda or simply keep track going forward of your soda purchases for the next week or month.  This way you will have the most accurate idea of how much your Coca Cola (soda) habit is really costing you or your family.

The amount one saves the farther you move to the right on the table gets increasingly impressive.  This is because of the compound growth of dividend reinvestment from the shares of Coca Cola.  Alternatively, the compound growth of your waist line, secondary to your consumption of Coca Cola, may very well be as equally impressive.  I recommend that you choose the type of compound growth that is right for you and your family.

 

I challenge you to start by drinking water over a carbonated and/or sweetened beverage.  I then challenge you to set aside the money you have saved by stopping your bad habit of drinking soda and invest it on a monthly or annual basis.  Let the slow and steady increase of your bad habit investment portfolio be a recurrent reminder of your healthier lifestyle decision.

 

Post Script

The Coca Cola Company isn’t going anywhere, which is great for several reasons.

  1. You no longer have to buy that bottle of coke behind the 7 eleven refrigerator glass every time you see one as if there was a pending apocalypse, because there will in fact indefinitely be more where that came from.
  2. The stock you purchased instead of buying 40-60 gallons of coke each year will provide you with increased value and dividends for the rest of your slightly healthier life.
  3. You can still occasionally drink a coke with your thirsty mime friend or drop a bottle into the deprived polar bear exhibit when no one is looking.
  4. You can someday try the invigorating bubbly Coca Cola bath to exfoliate your skin and cleanse your senses/soul.
  5. Doctors can still attempt to unclog feeding tubes with Coca cola, although meat tenderizer does work better.
  6. You can have the most stain free driveway in the neighborhood
  7. You can still enjoy the best baby back rib recipe

 

 

 

 

 

 

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s