How KO (The Coca-Cola Company) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a global beverage leader like The Coca-Cola Company makes money is essential for investors and anyone interested in the business of consumer staples. In this post, we break down KO's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick The Coca-Cola Company Overview

The Coca-Cola Company operates a vast beverage business, producing and selling nonalcoholic drinks including sparkling soft drinks, water, sports drinks, juices, and teas. Revenue comes primarily from selling beverage concentrates and syrups to bottling partners (Concentrate Operations) and from direct sales of finished products (Finished Product Operations). The company’s business spans over 200 countries, with a diversified portfolio of brands and a franchise bottling model that drives scale and efficiency.

Revenue Breakdown

• Total Revenue (Q3 2025): $12.5B (+5.1% YoY)
  • Concentrate Operations Revenue: $8.20B (65.8% of total, +16.2% YoY)
  • Finished Product Operations: $4.26B (34.2% of total, -11.2% YoY)
  • Growth is powered by strong concentrate sales, pricing initiatives, and resilient demand in emerging markets.

Gross Profit and Margins

• Gross Profit: $7.66B (61.5% gross margin)
  • Cost of Revenue: $4.80B (+2.9% YoY)
  • The Coca-Cola Company maintains robust margins due to its asset-light concentrate model and global brand strength.
• Most costs come from raw materials, bottling, and logistics.

Operating Income and Expenses

• Operating Income: $3.98B (+58.6% YoY, 32.0% margin)
• Operating Expenses: $3.68B (-21.1% YoY)
  • R&D: Not separately disclosed for Q3 2025
  • SG&A: $3.62B (+77.0% YoY, 29.1% of revenue) — includes marketing, advertising, and administrative costs to support global operations and brand investments
  • The Coca-Cola Company continues to invest in marketing and brand building while maintaining efficiency in its operating structure.

Net Income

• Pre-Tax Income: $4.18B (+23.8% YoY, 33.6% margin)
• Income Tax: $500M (12.0% effective tax rate)
• Net Income: $3.70B (+29.8% YoY, 29.7% net margin)
• The company converts a significant portion of sales into profit due to its scalable concentrate business and disciplined cost management.

What Drives The Coca-Cola Company's Money Machine?

• Concentrate Operations: 65.8% of revenue, with high margins due to the capital-light franchise model and pricing power
• Global Volume and Pricing: Volume growth in emerging markets and effective price/mix management drive top-line expansion
• Brand Investment: Strategic investments in marketing and innovation sustain consumer demand and premium positioning
• Future Growth Areas: Expansion into low/no-sugar beverages, ready-to-drink coffees, and functional drinks, though these segments are not yet major profit contributors

Visualizing The Coca-Cola Company's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk.
• Even after significant marketing and administrative costs, nearly 30% of revenue drops to the bottom line.

Key Takeaways

• The Coca-Cola Company's money comes overwhelmingly from concentrate sales to bottlers, leveraging a high-margin, scalable franchise model
• High gross and net margins illustrate the power of KO's global brand and asset-light business structure
• Heavy investment in marketing and brand equity, balanced by disciplined cost control
• Ongoing growth is driven by pricing initiatives, emerging market expansion, and portfolio innovation

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FAQ About The Coca-Cola Company's Income Statement

1. What is the main source of The Coca-Cola Company's revenue in 2025?

The Coca-Cola Company generates over 65% of its revenue from Concentrate Operations, selling beverage bases and syrups to bottling partners. Finished Product Operations contribute the remaining 34%, primarily from direct sales of bottled drinks.

2. How profitable is The Coca-Cola Company in Q3 2025?

KO reported net income of $3.70B in Q3 2025, with a net margin of approximately 29.7%, reflecting strong profitability driven by its high-margin concentrate business and disciplined cost management.

3. What are the largest expense categories for The Coca-Cola Company?

The biggest expenses on KO's income statement are operating expenses, particularly Sales, General & Administrative (SG&A) costs. SG&A reached $3.62B in Q3 2025 (29.1% of revenue), as the company prioritizes global marketing, advertising, and administrative support.

4. Why does Finished Product Operations operate at a loss?

Finished Product Operations, despite generating $4.26B in revenue, posted lower profitability in Q3 2025. This is because KO aggressively invests in direct distribution, logistics, and market expansion for finished products, believing these will drive long-term growth—even if the division is less profitable today.

5. How does The Coca-Cola Company's effective tax rate compare to previous years?

KO's effective tax rate in Q3 2025 was 12.0%, consistent with previous years. This moderate rate is primarily due to international tax structuring and benefits from share-based compensation.