Will the New Coca-Cola Be More Successful Than New Coke?

If, Coca-Cola’s (KO) stock price is anything to go by, the beverage company has been in need of a new look for a while now. And last night it delivered big changes that it hopes will beget a more successful, new Coca-Cola, not the success of New Coke.

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Coca-Cola has gained 8.7% this year, while PepsiCo (PEP) has risen 18% and Monster Beverage (MNST) has advanced 17%. Dr. Pepper Snapple (DPS) is up 7.9% in 2013.

So what’s actually changed? Let Deutsche Bank explain:

Coke announced the resignation of Steve Cahillane, former head of the Americas and on the short list of candidates to ultimately succeed Chairman and CEO Muhtar Kent when the time comes. As part of this move, former President of North America Sandy Douglas is returning to his old role while continuing to hold his position as Global Chief Customer Officer. Additionally, Coca-Cola Refreshments, the company’s owned and currently refranchising North American bottling operations will become part of the bottler triage group, Bottling Investments Group, run by President Irial Finan. With so much in flux and a no or low calorie naturally flavored soft drink using proprietary and exclusive Reb X likely forthcoming next year, the timing of these changes is interesting and hopefully signals an acceleration in the pace of US bottler divestitures.

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Credit Suisse’s Michael Steib believe the moves bring additional clarity for investors:

While these are significant steps, ultimately the goal is to return the North American business to more of an organizational separation of concentrate manufacturer and bottler – CEO Kent has always stressed the company's commitment to the traditional franchise model. Investors have been waiting for information regarding the next stages and we think today's announcements should provide much-needed clarity.

Alliance Bernstein’sAli Dibadj and team say Coca-Cola’s announcement actually makes the situation murkier. They write:

To us, the specific timing of this announcement is odd—6:46pm on a slow December evening, right on the heels of a thorough round of investor meetings where it was suggested that nothing is afoot. We cannot help but wonder what might be going on behind the scenes. Moreover, although we had perceived increased desire for KO’s next refranchisement moves over the past few days among investors and bottlers, we have always argued that an increasing profit pool may be an important prerequisite for a successful, sustainable refranchisement. Under that assumption, with the recent weakness of the company’s and the category’s North American pricing and volume performance—and in particular KO’s recent pricing “irrationality”—the timing of this organizational change simply seems baffling to us. Does KO believe that a favorable North America operating environment is nonessential to refranchisement, or is it expecting its financial results in this key market to soon improve from here? Could the company be incentivized by other factors (e.g., housing the business under BIG so that it can effectively buy more time to fix the problems that may be bigger than management had previously realized)?

Net-net, we believe that the changes may not all be positive despite the indicated possibility of refranchisement acceleration…

Shares of Coca-Cola have gained 0.2% to $39.30 today, while PepsiCo has dropped 0.5% to $80.91, Dr. Pepper Snapple has risen 0.7% to $47.65 and Monster Beverage has ticked down 0.1% to $61.54.