A few weeks ago, I stumbled across a brutally honest remarks on LinkedIn by Ian Cassel that’s still buzzing my head:

“The longer I invest the more I realize 50% of investing is taking a Buffett or Munger quote out of context to justify something you are doing that they would never do.”

First, It made me laugh and then it made me think. Because in investing, there’s a fine line between being inspired by Buffett and pretending to be Buffett.

Imitation can be risky especially when the context is wildly different. Take Bottlers Nepal (Terai), for example. Some see it as Nepal’s Coca-Cola Company (KO). But is it?

Warren Buffett’s legendary investment in The Coca-Cola Company (KO) is often cited as one of the greatest stock picks ever. Buffett began buying Coca-Cola stock in 1988, ultimately acquiring a 6.2% ownership for about $1 billion​. Decades later, that stake has grown to roughly 9% of the company worth nearly $28 billion and yields Berkshire Hathaway over $700 million in annual dividends​. This astonishing success has made Coca-Cola a staple example of value investing done right.

In Nepal, some investors have drawn a parallel with Coca-Cola by buying shares of Bottlers Nepal (Terai) Limited (BNT), the franchise bottler that produces and distributes Coca-Cola products in Nepal.

The logic goes: if Buffett got rich owning Coca-Cola stock, owning the local Coca-Cola bottler should be a similar goldmine.

At first glance, the thesis sounds seductive but it deserves second order thinking.

In this article, we’ll explore why investing in Bottlers Nepal Terai (BNT) is fundamentally different from Buffett’s investment in The Coca-Cola Company (KO). We’ll compare Coca-Cola’s asset-light, brand-driven business model with the asset-heavy, thin-margin economics of bottlers. By the end, it should be clear that buying Coca-Cola, the global brand, is not the same as owning a local bottling license. The drink may be the same, but the investment fundamentals are very different.

Warren Buffett’s Coca-Cola Bet vs the Nepali Imitation

Warren Buffett’s Coca-Cola investment is the stuff of investing legend. After the 1987 market crash, Buffett saw an opportunity to buy a great company at a fair price. He poured $1 billion into KO stock by 1988, making it Berkshire Hathaway’s largest holding at the time.

Why Coca-Cola? Buffett recognized Coca-Cola’s powerful brand, global reach, and pricing power – a classic “economic moat.” Coca-Cola could sell an addictive product (the famous sugary soda) with high profit margins, and competitors would struggle to take its market share.

Over the years, this thesis proved correct: Coca-Cola’s stock value compounded immensely, and the company kept raising its dividend every year. In Buffett’s 2022 letter, he noted that Berkshire’s annual dividends from Coca-Cola grew from $75 million in 1994 to $704 million in 2022 – increasing every year, as reliably as birthdays​. In 2024, after another dividend hike, Berkshire’s Coke stake was on track to earn roughly $776 million in dividends for the year. This is the dream scenario for a value investor, an investment that combines steady growth, high returns on capital, and ever-increasing cash payouts.

Seeing this success, it’s understandable that Nepali investors look at Bottlers Nepal Terai (BNT), the local Coca-Cola bottling company and hope to replicate a bit of Buffett’s magic. After all, BNT is “Coca-Cola in Nepal,” right? It produces Coca-Cola, Sprite, Fanta and other Coke brands, and sells them across Nepal.

If Coca-Cola the parent company is a fantastic business, one might assume its Nepali bottler would also be a great long-term investment. In recent years, some Nepali retail investors and even institutions have been accumulating BNT shares, thinking that owning this Coca-Cola bottler is akin to owning the Coca-Cola franchise for Nepal..maybe a ticket to steady profits.

However, this is where we must separate perception from reality. Buffett did not invest in Coca-Cola’s bottling plants; he invested in The Coca-Cola Company, the parent firm that owns the brand and secret syrup recipe. The economics of Coca-Cola the brand owner are vastly different from the economics of Coca-Cola’s franchise bottlers. To understand the difference, let’s compare the two business models.

Coca-Cola Company (KO): An Asset-Light Brand Powerhouse

The Coca-Cola Company (ticker KO) is a prime example of an asset-light, brand-driven business model. Coca-Cola doesn’t actually bottle most of the Coke you drink. Instead, it focuses on what it does best: building an iconic brand, developing beverage formulas, and manufacturing concentrates/syrups. It then sells these syrups to a network of local bottling partners around the world, who handle the heavy work of bottling, distribution, and sales. This model dates back over a century; as early as the 1900s, Coke’s management realized they could boost profitability by having other companies do the capital-intensive manufacturing and distribution, while Coca-Cola themselves just supplied the key raw materials (the concentrate) and the brand​. In other words, Coca-Cola offloaded the low-margin, heavy lifting to bottlers, and kept the high-margin, intellectual property part of the business in-house.

This arrangement has created a massive global “Coca-Cola system”. By 2020, Coca-Cola had about 225 bottling partners in more than 200 countries. Each bottler signs a franchise agreement with Coca-Cola specifying its territory (which regions/countries it can sell in), which Coca-Cola products it can produce, and other terms​. The bottler gets the right to use Coca-Cola’s brand and buy its concentrate; in return, it must adhere to Coca-Cola’s standards and pricing structures. Coca-Cola often provides marketing support and guidance, but each bottler is largely responsible for running its local operations and finding customers (retailers, distributors) in its region.

Why is this franchising model so powerful for The Coca-Cola Company? Because it creates a virtually infinite scalable moat: Coca-Cola can be sold everywhere from New York City to a remote village in Nepal without KO having to build a factory and truck fleet in each location. Instead, local partners invest their capital to build plants and deliver soda, while Coca-Cola earns a royalty (via selling concentrate at a markup) on every bottle sold. This manifests in Coca-Cola’s financials as extraordinary profit margins and return on capital.

Consider Coca-Cola’s profitability: in recent years, KO has maintained net profit margins around 22–24%  meaning nearly a quarter of every dollar in revenue becomes profit. Its operating margins are even higher; excluding certain accounting items, KO’s underlying operating margin is roughly 30%. This is possible because producing concentrate is cheap relative to its pricing, and Coca-Cola doesn’t bear the cost of bottling for most sales.

Meanwhile, KO’s return on equity (ROE) is in the range of 40%, an impressive figure reflecting how efficiently it generates profits from shareholders’ capital (helped by the fact that brand assets don’t weigh down the balance sheet).

In short, Coca-Cola’s business is  built on an intangible brand asset and is a cash machine. It’s asset-light (few factories relative to sales), high-margin, and backed by an enormous brand loyalty moat that has been cultivated over decades. When Buffett invested in KO, he effectively bought a piece of this global brand and its economics.

It’s important to note that KO’s growth and profits come not just from Coca-Cola soda, but a vast portfolio of beverages. The company owns hundreds of brands worldwide – from Coke, Sprite, and Fanta to Minute Maid juices, Dasani water, Georgia Coffee, and more. This diversification gives Coca-Cola multiple revenue streams and helps sustain its global dominance. It also means KO’s fortunes are not tied to one country; about 85% of Coca-Cola’s sales come from outside the United States. So, Coca-Cola can offset a slump in one region with strength in another.

Bottlers: Asset-Heavy Business with Thin Margins

Now, let’s look at the other side of the coin: the bottlers, such as Bottlers Nepal Terai (BNT). Bottlers are franchise partners who buy that concentrate from Coca-Cola and turn it into the fizzy drink that reaches consumers. Unlike the Coca-Cola Company, which is asset-light, a bottler’s business is inherently asset-heavy. Bottlers must invest in manufacturing plants (to carbonate and bottle the drinks), bottling lines and machinery, fleets of trucks for distribution, warehouses, and all the logistics needed to get beverages onto store shelves and into coolers. They also handle local marketing, sales, and customer relationships (ensuring stores and restaurants stock their products). In essence, bottlers take on the costs and complexities of manufacturing, distribution, and marketing that Coca-Cola Company avoids.

Under the franchise agreement, a bottler like BNT typically has an exclusive territory (in BNT’s case, regions of Nepal) where only they can produce and sell Coca-Cola trademarked beverages. They purchase the concentrated syrup from The Coca-Cola Company (or its regional supply point) at a set price, mix it with water, sugar, and CO2, bottle it in various formats (glass, PET, cans), and then sell the finished products to retailers/wholesalers in their territory. The pricing structure is crucial: Coca-Cola Company charges bottlers a price for concentrate that leaves the bottler with only a portion of the profit pie. Coca-Cola’s concentrate pricing is often based on a percentage of the bottler’s revenue (a model known as “incidence-based pricing”) effectively Coca-Cola takes a fixed cut of every rupee of sales​. This means if a bottler manages to increase local prices or sales, Coca-Cola might raise concentrate prices to capture its share. Conversely, if input costs for the bottler rise (e.g. sugar, fuel, labor), the bottler can’t simply pay Coca-Cola less – it still owes the same per-unit concentrate cost, squeezing its margins.

As a result, bottling is generally a lower-margin business. A stark illustration is in the U.S.: The Coca-Cola Company enjoys ~24% net margins, whereas its largest U.S. bottler (Coca-Cola Consolidated) operates around a mere ~2% net margin. In financial terms, the bottlers “trade margin for volume” – they get a high volume of sales (all those crates of soda) but each unit sold contributes only a thin margin after paying Coca-Cola for concentrate and covering all local costs.

Bottlers Nepal’s financials reflect this dynamic. BNT’s net profit margin is on the order of just 5–6% in recent years– that means out of each rupee of soda sold, only a few paisa of profit remain for the bottler. Its operating margin (before interest and taxes) is a bit higher, roughly 8–10%, but still a far cry from Coca-Cola Company’s operating margins.

This is the fundamental difference: Coca-Cola (KO) skims off much of the profit by selling high-priced concentrate, leaving bottlers like BNT with the tougher job of managing manufacturing efficiencies and distribution costs to eke out a single-digit percentage profit.

Why are the margins so low for bottlers? Several factors play a role:

  • High Operating Costs: Bottlers have significant ongoing costs – raw materials like sugar, PET resin for bottles, aluminum for cans, carbon dioxide, packaging, and the concentrate itself (which is essentially a royalty payment to Coca-Cola). They also incur labor costs for factory workers, drivers, salespeople, etc. Many of these costs (sugar, PET plastic, fuel for transport) are volatile and can spike with inflation, directly eating into profits if prices can’t be raised proportionately.
  • Capital Intensity (Capex): To stay in business, bottlers must continually invest in their production and distribution infrastructure. Machines and trucks wear out or become obsolete, new products require new packaging lines (for example, shifting from glass bottles to PET or introducing cans demands new machinery). Bottlers Nepal, for instance, added a PET bottling line in 2013 and more recently an “ASSP” line (Affordable Small Sparkling Package) to produce smaller-sized bottles (​bnl.com.np). These are multi-million dollar investments. Unlike Coca-Cola Company, which doesn’t need to build a new plant every time demand grows, BNT must spend heavily on capital expenditure whenever it needs to increase capacity or improve efficiency. This capex intensity means a large chunk of cash flows gets reinvested into the business rather than flowing to shareholders as dividends. It also means bottlers often take on debt to finance expansion. High capex keeps return on capital lower – every rupee earned has to work to cover depreciation of a big asset base.
  • Working Capital and Inventory: Bottlers typically have to hold significant inventory – both of finished products and raw materials. For instance, BNT needs to stock bottles, caps, labels, and enough inventory of drinks especially ahead of peak season. It also may extend credit to retailers or distributors (e.g. giving shops a few weeks to pay for cases of Coke). This working capital requirement ties up cash. Coca-Cola Company, by contrast, might even get paid upfront or on short terms by bottlers for concentrate, resulting in far lower working capital needs for KO.
  • Regulated or Fixed Margins: In some markets, the beverage industry’s pricing can be constrained. While not “regulated” by law in most cases, in practice Coca-Cola often sets a suggested retail price that bottlers adhere to, and local market dynamics (including competition from Pepsi or others) limit how much a bottler can charge. The franchise agreement usually fixes the concentrate price (often as a % of wholesale price) which effectively caps the gross margin a bottler can achieve. If governments impose taxes (like excise duties or sugar taxes) or cap prices of essentials, that can further squeeze bottlers. In Nepal, for instance, any steep hike in soda prices might hurt volume given consumers’ limited purchasing power – so BNT can’t simply pass all cost increases to customers.
  • Financing Costs: Because of the need for capex and often thin margins, bottlers may carry significant debt relative to their earnings. Servicing interest on loans becomes another expense. In a high interest rate environment (like Nepal has experienced in past few years), this can even tip a bottler into losses. In fact, Bottlers Nepal Terai reportedly posted a loss of NPR 118 million in a recent quarter​, reflecting how challenging the economics can get when costs rise or sales slow (seasonal off-peak or other issues) but fixed expenses (including interest) remain. In contrast, The Coca-Cola Company carries debt but has such high operating profits and cash flows that interest costs are easily managed (and KO’s debt is often at low interest rates given its strong credit).

Given these factors, bottlers operate with much lower return metrics. BNT’s Return on Equity (ROE) is around 10–15% in a good year​ – decent, but not spectacular, and certainly below Coca-Cola Company’s ~40% ROE. Return on Capital Employed (ROCE) for bottlers is also moderate, often in low double-digits (we’ll compare specific numbers in the table ahead). Essentially, a bottler is a manufacturing & logistics company tied to one customer (the brand owner) – a tough business albeit with guaranteed demand as long as the brand is strong.

It’s not all doom and gloom for bottlers, of course. A well-run bottler can still be profitable and even lucrative at scale. They benefit from volume growth – as populations and incomes grow, soda consumption can rise, lifting bottlers’ sales. They also can improve efficiency: upgrading to modern plants, optimizing routes, negotiating better prices on sugar or packaging can all boost the thin margins a bit. And being the exclusive Coca-Cola bottler in a region is a protected position (a local monopoly for Coca-Cola products). This exclusivity is valuable – it means BNT doesn’t face other Coke bottlers undercutting it in Nepal; its main competitor is Pepsi and other drink brands. So a bottler has a guaranteed share of market demand for Coke-brand drinks. The trick is converting that monopoly on Coca-Cola in Nepal into solid profits – which, as we see, isn’t easy due to the cost structure.

To summarize the bottler’s model: asset-heavy, lower-margin, volume-driven, reliant on the parent brand’s support. Bottlers carry the burden of operations and in return get a narrower slice of the pie. Owning a bottler is not like owning the Coca-Cola brand – it’s more akin to owning a utility-like manufacturing business that’s tethered to the brand owner.

As one analyst quipped, “Coke gets the cream, bottlers get the skim milk.” That’s an exaggeration, but it captures the idea that the value in the Coca-Cola system heavily tilts toward the brand company.

Conclusion: The Brand vs The Bottler – Not the Same Investment

Warren Buffett often distinguishes between a great company and a great stock. The Coca-Cola Company was (and is) a great company with a one-of-a-kind business model – selling happiness in a bottle at high margins, powered by an enduring brand. When Buffett bought KO, he effectively bought into that unstoppable global money machine, and it has richly rewarded him over the decades​.

Bottlers Nepal Terai, on the other hand, is a very different kind of business. It may carry the Coca-Cola name on its trucks, but under the hood it’s a manufacturing & distribution operation with slim margins, significant capital needs, and exposure to local economic swings. Buying BNT stock is not the same as buying Coca-Cola stock, just as owning a local Coca-Cola bottling plant is not the same as owning the Coca-Cola brand. The Nepali investors who are scooping up BNT in hopes of “another Coca-Cola” might be taking on more than they realize: they’re investing in a franchisee, not the franchisor; in a company that pays royalties (through concentrate purchase) rather than collects them.

This doesn’t mean BNT is a bad investment per se – but expectations should be tempered. Investors should be septic and have some questions on his/her mind: What growth in volume and earnings is realistic in Nepal? How well is it managing costs and capital? Is it maintaining a healthy balance sheet? These are the questions that determine BNT’s value as an investment.

BNT could deliver solid returns if the Nepali soft drink market expands and if the company runs a tight ship. It has a profitable (albeit low-margin) operation and a debt reduction or efficiency boost could increase its net margins a bit. Perhaps BNT will also diversify its product range (introducing more juices or even diversifying into snacks distribution as some bottlers have) which could improve utilization and margins. So, there is upside potential. But it’s unlikely to ever become a cash geyser the way Coca-Cola Company is. The structural limitations of the bottling business cap the upside.

The clear takeaway is this: Buying BNT is not “buying Coca-Cola” – it’s buying a piece of Coca-Cola’s supply chain. Investing in Coca-Cola the global brand (KO) is fundamentally different from investing in a local Coca-Cola bottler like BNT. Buffett’s success with Coca-Cola came from owning the company that tolls every drink sold worldwide. Owning BNT means being the toll-payer in Nepal, hoping to make it up on volume. Nepali investors would do well to understand this distinction.

Keywords: Bottlers Nepal (Terai) Limited (BNT)