Investment in Coca-Cola carries certain risks, one of which involves water scarcity and energy shortages. Rising raw material costs will lead to lower margins and over-exploitation of resources, while increasing government regulation in the US stipulating a ban on large carbonated drinks in would also impact revenues in North America. Rising health concerns would also lead to a decline in overall sales of Coca-Cola’s non-diet carbonated drinks, while foreign exchange fluctuations would result in headwinds, when revenues are converted back to the US Dollar. In Coca-Cola’s latest quarter earnings results, currency fluctuations impacted net income by around 2%.
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