Some investing trends are so entrenched and powerful that it's easy to see only the past, while discounting future potential. Because of Coca-Cola's (NYSE:KO) longevity, and due to its widespread market presence in over 200 countries, you might assume that the company has tapped out its total potential market share. But Coke will not stop growing anytime soon, as it will continue to prosper from one of the most visible trends on the planet: world population growth.

One of the ways Coke measures itself is by its share of daily worldwide beverage consumption. According to the company, in the year 2000, the human population consumed a total of approximately 48 billion beverages each day. Coke's share of this daily consumption (counted as beverages bearing trademarks owned by or licensed to the company) was roughly 1 billion beverages, or 2.1%. By the end of 2012, Coke estimated that global daily beverage consumption had grown to approximately 57 billion beverages each day, and its share of that consumption was pegged at 1.8 billion beverages daily, or 3.2% of the total.  

Potential investors should be impressed by the recent rate of Coke's daily beverage share growth. In 13 years, world daily consumption of beverages grew by almost 19%. Coke grew its servings, however, by 80%, and grew its share of the daily market by 50%. You can tie Coke's revenue growth to these two drivers just as Coke does: the population of the world, and Coke's growing share of each beverage consumed daily worldwide.

This market is only getting bigger. Below is a chart of world population growth. The future growth lines in red, orange, and green are taken from United Nations 2010 projections:

World Population

Source: Wikimedia Commons.

Under the "medium" scenario, the world's population is expected to grow from 7 billion people today to 9 billion people by just after 2040. Consider a teenager who is 13 this year. By the time she is 40, if Coke can grow daily share at its current rate of 1 percentage point every 12 years, 3.4 billion beverages per day will bear trademarks owned by or licensed to the company. This will equal 1.2 trillion servings per year. Assuming the price of Coke's average beverage at least doubles during those 27 years, the company's annual revenue when our teen turns 40 will be close to $180 billion, and if Coke can preserve its present profit margin, the revenue will generate in the neighborhood of $32 billion of net income each year. This slow, almost inexorable growth will pay off handsomely for anyone who can buy shares today and reinvest dividends for the next three-plus decades.

Before you laugh away the ludicrousness of trying to project results 27 years into the future, bear in mind that 27 years ago, the world population was just under 5 billion people, and Coke stock was selling, on a split-adjusted basis, at just under a dollar on Jan. 2, 1986. One thousand dollars of Coca-Cola stock purchased that day, with dividends reinvested as the world added 2 billion people, would be worth $39,000 today.

Our young investor might have some qualms placing her dollars in a company that sells flavored soda, a category of beverage that is increasingly under scrutiny for its effects on health and well-being. She'll be comforted to know that consumption of sweetened carbonated beverages is on the wane. Coke is facing this future head-on, using its powerful global distribution system to grow billion-dollar brands seemingly overnight in juice, tea, and other non-cola drinks. The company has added five billion-dollar brands since 2010 alone. These include Latin America's Del Valle, and Ayataka Josencha, a Japanese iced green tea.

A few grains of salt to dissolve in this drink
Coca-Cola does face tangible risks in the long term. These include the potential inability to reduce the proportion of sweet, carbonated soda sales to total beverages. On another front, as it continues to expand in the growth categories of coffee, tea, water, and juice, Coke will increasingly find itself competing against monster snack and beverage companies even larger than itself. A salient example is Nestle (NASDAQOTH:NSRGY), which is twice the size of Coke, and boasts beverage revenue of approximately $29.2 billion, or 62% of Coke's total annual revenue. For now, Coke is navigating its competitive avenues deftly. Its 50/50 joint venture with Nestle, "Beverage Partners Worldwide," sells the Nestea iced tea drink in non-U.S. markets including Europe and Canada.

Finally, there is the risk that population growth declines rather than increases. The "low" estimate on the chart above projects that this may occur as soon as the mid 2040s. So the company has some time to figure out how to compensate for the potential flattening and decline as shown in the green line.

Ultimately, no trend is infallible or permanent. But few are as bankable as our planet's swelling human population. For young adults who are inclined to save or invest earnings from an upcoming summer job, there are no better shares than these to purchase and squirrel away for a few decades.
