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 KO (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 KO Overview

The Coca-Cola Company operates as the world’s largest nonalcoholic beverage company, producing and marketing soft drinks, water, juices, teas, coffees, and energy drinks. Revenue comes primarily from selling beverage concentrates and syrups to bottling partners (Concentrate Operations), as well as direct sales of finished beverages (Finished Product Operations). The business is organized into these two main segments, with Concentrate Operations representing the majority of revenue and profits.

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 pricing, higher concentrate sales, and expansion in emerging markets, offsetting declines in finished product volumes.

Gross Profit and Margins

• Gross Profit: $7.66B (61.5% gross margin)
  • Cost of Revenue: $4.80B (+2.9% YoY)
  • KO maintains robust margins due to its asset-light concentrate model, strong brand pricing power, and global scale.
• Most costs come from raw materials, bottling, and distribution expenses.

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; typically a small portion of revenue, focused on beverage innovation and packaging.
  • SG&A: $3.62B (+77.0% YoY, 29.1% of revenue) — includes marketing, advertising, administrative, and selling costs.
  • KO continues to invest heavily in global marketing and brand building while maintaining efficiency in operations.

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)
• KO converts a significant portion of sales into profit due to its scalable concentrate business and disciplined cost management.

What Drives KO's Money Machine?

• Concentrate Operations: 65.8% of revenue, with higher margins and strong YoY growth, are the core profit driver.
• Global Brand Reach: Over 200 countries, with pricing power and premiumization supporting revenue growth.
• Marketing Investment: $3.62B in SG&A, reinforcing brand leadership and consumer engagement.
• Emerging Markets Expansion: Key growth area, though not yet as profitable as mature markets.

Visualizing KO'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

• KO's money comes overwhelmingly from concentrate sales to bottling partners, a high-margin, asset-light business model.
• High gross and net margins illustrate the power of KO's global brand and concentrate-focused strategy.
• Heavy investment in marketing and brand building, balanced by efficiency in operating costs.
• Ongoing growth is driven by pricing power, emerging market expansion, and product innovation.

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FAQ About KO's Income Statement

1. What is the main source of KO's revenue in 2025?

KO generates over 65% of its revenue from Concentrate Operations, selling beverage bases and syrups to bottling partners. Finished Product Operations contribute the remaining 34%, mainly from direct sales of bottled drinks.

2. How profitable is KO 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 model and disciplined cost control.

3. What are the largest expense categories for KO?

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

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

Finished Product Operations, despite generating $4.26B in revenue, posted an operating loss due to higher production, distribution, and marketing costs. KO invests in this segment to support global reach and brand presence, believing these will drive long-term growth—even if the division is less profitable today.

5. How does KO'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.