Erosion risks

• Retail shift toward warehouse/e-commerce fulfillment reduces in-store merchandising advantage
• Route labor and fuel cost inflation
• Retailers push private label and demand higher trade spend

Leading indicators

• Share of U.S. salty snack sales in tracked channels
• Price/mix vs volume trend in North America convenient foods
• In-stock rates and promotional execution metrics

Counterarguments

• Large rivals can replicate parts of DSD via third-party distributors
• Retailers may prefer warehouse delivery to simplify store operations

Erosion risks

• Consumer shift toward healthier snacks and ingredient scrutiny
• Private label quality improvements narrow perceived differentiation
• Brand dilution from overextension

Leading indicators

• Household penetration and repeat rates for core brands
• Relative price premium vs private label
• Brand equity tracking and innovation hit rate

Counterarguments

• Taste trends can change quickly; challenger brands can capture attention
• Promotional intensity can compress brand pricing power

Erosion risks

• Commodity cost spikes can overwhelm scale savings
• Capacity additions by competitors reduce utilization advantage

Leading indicators

• FLNA operating margin trend
• Manufacturing utilization and productivity metrics
• Input cost inflation vs realized pricing

Counterarguments

• Retailers' private label leverages retailer scale and can underprice brands
• Contract manufacturing reduces minimum efficient scale for niche entrants

Erosion risks

• Private label and value-brand substitution in staples
• Category decline in some ready-to-eat cereals
• Quality incidents (e.g., recalls) can damage trust

Leading indicators

• Quaker brand share trends in core categories
• Recall/quality incident frequency
• Price gap vs private label

Counterarguments

• Switching costs are low for consumers; retailers can reallocate shelf space quickly
• Marketing spend may not offset structural category headwinds

Erosion risks

• Retail consolidation increases buyer power
• Shift toward direct-to-consumer and online reduces traditional distribution edge

Leading indicators

• In-stock rates and fill rates in major retail channels
• Trade spend as % of sales

Counterarguments

• Distribution is necessary but not sufficient; products compete on price and innovation
• Large retailers can favor their own private label over branded products

Erosion risks

• Route-to-market costs (labor, fuel) and service complexity
• Retailers push more private label and demand higher trade spending
• Regulatory/tax pressure on sugary beverages

Leading indicators

• Net pricing vs volume trend in NA beverages
• DSD productivity (stops per day, cost per case)
• Shelf-space and fountain/foodservice placements

Counterarguments

• Coca-Cola system has comparable scale and execution capabilities
• Warehouse delivery and e-commerce can reduce the value of in-store merchandising

Erosion risks

• Long-term shift away from sugary CSD
• Functional beverage fragmentation (energy, hydration, wellness)
• Reputation risk from ingredient scrutiny

Leading indicators

• CSD and sports drink share trends
• Household penetration for zero-sugar variants
• Innovation contribution to category growth

Counterarguments

• Brand preference can be disrupted by fast-growing challengers and lifestyle brands
• Heavy promotions can limit sustainable pricing power

Erosion risks

• Retailers prefer category specialists in fast-changing segments
• SKU complexity can increase supply chain and service costs

Leading indicators

• Mix shift toward faster-growing beverage categories
• SKU rationalization and service levels
• Route margin and complexity metrics

Counterarguments

• Best-of-breed brands can win shelf space despite smaller portfolios
• Some categories (energy) have different distribution dynamics and competitors

Erosion risks

• Local value brands and informal competitors
• Health regulation (sugar/salt labeling) and marketing restrictions
• Political and macro instability impacting demand

Leading indicators

• Organic growth vs category in key LATAM markets
• Pack/price architecture changes and affordability metrics
• Brand share trends in core countries (e.g., Mexico, Brazil)

Counterarguments

• In high-inflation environments, consumers may trade down regardless of brand equity
• Local players can outcompete on price and regional tastes

Erosion risks

• Distributor dependence and execution variability
• Rising logistics costs and infrastructure constraints

Leading indicators

• Numeric distribution and weighted distribution in key channels
• Route-to-market cost inflation
• Working capital and trade spend trends

Counterarguments

• Competitors with strong bottler systems (e.g., Coca-Cola) have comparable reach
• Modern retail consolidation can reduce distributor advantage

Erosion risks

• Health and packaging regulation (sugar taxes, labeling, deposit return schemes)
• Retailer private label strength in Europe
• Geopolitical/energy-cost volatility

Leading indicators

• Category share trends in key European markets
• Regulatory changes affecting formulation/packaging costs
• Promotional intensity and price gaps vs private label

Counterarguments

• European retailers exert strong pricing pressure and can shift volume to private label
• Local and multinational competitors are well-capitalized and innovative

Erosion risks

• Consolidated retailers increase buyer power
• Shift to discounters changes pack architecture and margins

Leading indicators

• Weighted distribution and shelf-space share in modern trade
• Gross margin and trade spend trends in Europe

Counterarguments

• Distribution can be commoditized; competitors can access similar wholesalers/logistics
• Retailers can delist or reduce facings for underperforming SKUs

Erosion risks

• Geopolitical instability and trade restrictions
• Currency volatility and inflation reduce affordability
• Local low-price competitors and informal channels

Leading indicators

• Organic growth and affordability metrics in key AMESA markets
• FX impact and pricing realization vs inflation
• Numeric distribution in traditional trade

Counterarguments

• In many AMESA markets, price dominates brand; switching costs are minimal
• Supply chain disruptions can quickly shift share to local producers

Erosion risks

• Distributor dependence and execution variability
• Infrastructure/logistics disruptions

Leading indicators

• Service levels and out-of-stock rates in priority markets
• Distributor performance KPIs and working capital

Counterarguments

• Competitors with local scale can match or exceed reach in specific countries
• Route-to-market advantages can be transient if distributors switch allegiances

Erosion risks

• Fast-moving local competitors and copycats
• Regulatory changes and geopolitical tensions affecting supply chains
• Channel shifts toward e-commerce and quick commerce

Leading indicators

• Market share trends in China/India/SEA priority categories
• E-commerce penetration and online share-of-shelf
• Speed of innovation cycles and localization success

Counterarguments

• Local champions can out-innovate and out-market in specific countries
• Online channels can reduce traditional distribution advantages

Erosion risks

• Dependence on third-party distributors/bottlers
• Rising last-mile costs and service expectations

Leading indicators

• Weighted distribution across modern trade and convenience
• Distributor network stability and performance
• Service level metrics in top cities/regions

Counterarguments

• Distribution partners can also serve competitors, limiting exclusivity
• New digital-native brands can reach consumers without traditional distribution