Overall, the Coke vs Pepsi case study highlights the importance of understanding one's target market and developing a clear brand image and product strategy. Let us bottle and sell your best-tasting creation to the world-wide market! Hi, my name is John Lau but you can call me JL. Nam lacinia pulvinar tortor nec facilisis. Let's find out. Marketing Strategies Comparison Sales growth has been a significant problem for PepsiCo because it indicates that customers arent satisfied with what the company provides. Both companies have smaller, yet important, followings on other platforms such as Twitter and Instagram. Given these impressive growth and financial metrics, it makes sense that Coke and Pepsi stocks would both be beating the market in 2022. Both Coca-Cola and PepsiCo have not had exceptional figures for EPS & sales growth. The concept is fabulous! David Gorton, CPA, has 5+ years of professional experience in accounting. In PepsiCo's fiscal year ending 12/25/2021, 60% of net company revenue was generated by the three North America division lines, and the Frito-Lay North America division was responsible for approximately half of the company's operating profit for the year. Cost basis and return based on previous market day close. In addition, Coca-Cola also created the Bottling Investment Group segment to strategically assess how products are bottled, shipped, and stored. The New Coke spurred debates as people wrote to the company to change it back to the classic Coca-Cola taste. Till today, Pepsi is sugary and has a citric taste that makes its consumers prefer Pepsi over Coke. It also allows Coca-Cola to have a presence in more countries. With roots dating back to 1898, PepsiCo has built a highly-diversified product portfolio. We put all my beverage industry knowledge into this A to Z guide, helping you understand how to import, whats the process, how to find the best beverage machines, etc. The United States no longer accounts for the majority of Coca-Colas sales, totaling 43% of turnover in 2019. Any views or opinions expressed may not reflect those of the firm as a whole. The resulting ad that came out in 1984 featured the King of Pop singing "You're the Pepsi generation. As two of the prime consumer products in modern civilization, Coke and Pepsi have come to epitomize perhaps the central feature of all advertising, which is to provide the forum for placing social values and attitudes on a plane with material ones be they goods, services, or money. UNH's Government business remains well-poised for growth. Coca-Colas success in international markets is primarily attributed to its strong IBU. PEP may own a more diverse product line, but KO has been able to drive more earnings to its bottom line. Sales Tax for an Check out the dividend history of Coca-Cola here and Pepsi here. If you look beyond that headline revenue number, more differences show up between these two investments. Theyre leaders in their segment, but how do they compare? Check out our Best Dividend Stocks page by going Premium for free. PepsiCos largest markets are located in North America. Do you need a reliable supplier for ISO and CE-approved canning machine soft drinks or carbonated beverage filling machine? Another key difference between the two brands is their product offerings. "PepsiCo Brands: All 23 Billion Dollar Brands Explained.". Chip Stapleton is a Series 7 and Series 66 license holder, CFA Level 1 exam holder, and currently holds a Life, Accident, and Health License in Indiana. For these reasons, I'd argue that Pepsi has the edge in terms of competitive positioning. Pepsi's cash dividend payments to shareholders were well covered by the free cash flow it generated over the past year, while Coca-Cola paid out about $800 million more in dividends than it produced in free cash flow. Stay up to date with timely dividend news. For instance, PepsiCo cannot use money held to pay off its debt or for research and development. KO is primarily a beverage business, but PEP generates around half of its sales from food brands such as Doritos, Frito Lay and Quaker Foods. The weighted average cost of capital is calculated taking into consideration the relative contribution of these sources towards company's overall structure. Investopedia requires writers to use primary sources to support their work. CarDekho Success Story - How It Finds the Right Cars for the Users? According to MSNBC , Diet Coke sold 927 million cases in 2010, compared to Pepsi's 892 million. A circular merger is a transaction to combine companies that operate within the same general market, but offer a different product mix. Both companies regularly produce commercials for the Super Bowl, while PEP is in the midst of a 10-year contract to sponsor the halftime show. Among national concentrate producers, CocaCola and Pepsi-Cola, the soft drink unit of PepsiCo, claimed a combined 76% of the U. Pellentesque dapibus efficitur laoreet. Pepsi, at the same time, gave its health-conscious customers a sugar-free option called Diet Pepsi. PepsiCo's comparable figure clocks in at about half that rate, although it's also holding up well in today's inflationary environment. Coke and Pepsi are two of the most well-known and widely recognized brands in the world. Lorem ipsum dolor sit amet, consectetur adipiscing elit. As their shelf-space declined, small brands were shuffled from one owner to another. Barbie Doll Rhetorical Analysis 1144 Words 5 Pages Advertisements: Exposed When viewing advertisements, commercials, and marketing techniques in the sense of a rhetorical perspective, rhetorical strategies such as logos, pathos, and ethos heavily influence the way society decides what products they want to purchase. Perhaps just as impressive as their streak of consecutive dividend increases is the rate at which KO and PEP have grown their dividends. Find other companies that have increased their dividends for more than 25 consecutive years, in our 25-year dividend increasing stocks page. With the production of Cheetos, Kurkure, Lays and Quaker, the company is giving a tough competition to its counterpart Coca Cola in the market. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. One area where Coca-Cola has a clear advantage over Pepsi is in international expansion. Coca-Cola, on the other hand, has a more limited range of products, focusing primarily on carbonated sodas and bottled water. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. You must be a shareholder on or before the next ex-dividend date to receive the upcoming dividend. Operating profit also improved by 9% in 2004 but only 7% in 2005 which is in contrast to Pepsi. What was the Challenge He recreated the blind taste test with a few test subjects and monitored their brain activity. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Although Pemberton had discovered Coca-Cola, it was his bookkeeper, Frank M. Other differences would be in the names of the product variations Max for Pepsi and Diet for Coke. Coke has traditionally focused on a wider, more general audience, while Pepsi has targeted younger consumers with a more edgy and innovative marketing approach. The company introduced the low calorie version of the product, called Coke Zero, and even changed its flavor, which was reverted after dissatisfaction was expressed. Pellentesque dapibus efficitur laoreet. The operating profit of PepsiCo Beverages North America increased 26% from 2020 to 2021, reflecting the resurgence of the post-pandemic environment. The marketing strategies of coca cola are highly flexible and the company changes its marketing strategies with changing times. With this, came the question of how cultural messages affect our opinions enough to change behavioural preferences about something as simple as a sugary drink. If youre looking for a trustworthy company with years of expertise, its time to contact iBottling. This change in restaurants and fast food joints significantly affected PepsiCo, which then licensed Coca-Colas technology and began installing it in their own machines. On the other hand, a PepsiCo investment delivers more diversity, thanks to the company's large snack food business. Thanks to stagnating or declining net incomes, the valuations of the two beverage giants is starting to push into overvalued territory. Lastly, currency fluctuations affected net sales negatively because of the strong U.S. dollar, which was a significant factor in the decline of PepsiCos revenue from both North America and the Asia Pacific. The company analyzes the pricing strategies of its competitors, sees where comparable products have been priced, and strives to set their own prices around the same level as their competitors. What brands does The Coca-Cola Company offer? PepsiCo does not have a substantial presence in Asia, the Middle East, and Africa combined; it only holds around 3% of these regions nonalcoholic beverage market share. Both companies have been around for more than 100 years and sell billions of dollars of product annually. As a result, their operating profits are more similar than you might otherwise expect. Pepsi This case study discussion is about branding. ", Beverage Industry. Reproduction of such information in any form is prohibited. Hi, Im John Lau, the funder of iBottling.com, Ive been working in a factory in China that makes beverage equipment for 16 years now, and the purpose of this article is to share with you the knowledge related to beverage equipment from a Chinese suppliers perspective. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. All junk foods are incomplete without this cold beverage. Exclusive insider of the beverage industry. A relationship and a rivalry ingrained in the culture that predates the 20th century. Worth $125.3 billion in 2020, the sugar-free carbonated drink market is expected to reach $243.5 billion by 2030. Your account is fully activated, you now have access to all content. With impacts to restaurants, dining out, consumer preferences, and distribution capabilities, both companies are also emerging from the COVID-19 pandemic. If you like the taste of Pepsi over Coca-Cola, you're in the minority. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. One way they are trying to reduce their debt is through share repurchases. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Past performance is no guarantee of future results. Africa, Middle East, and South Asia (all products in Africa, Middle East, and South Asia). Certain financial information included in Dividend.com is proprietary to Mergent, Inc. ("Mergent") Copyright 2014. Since then, the rivalry between the two drinks has never stopped. Over the past five years, KO has significantly trailed the performance of both PEP and the S&P 500. *Average returns of all recommendations since inception. PepsiCo International B.U.s accounted for $6 billion of the companys $63 billion in annual revenues. Coca-Cola has a centralized focus on the beverage industry, though they've emerged in It also takes a more direct pricing strategy by analyzing consumer demand and setting prices accordingly. Knowing your AUM will help us build and prioritize features that will suit your management needs. Effective strategies generate strong word of mouth and can reach millions of individuals in minutes. Stocks recently featured in the blog include: UnitedHealth Group Inc. UNH, The Coca-Cola Co. KO, Roche Holding AG RHHBY, Lam Research Corp. LRCX and Valero Energy Corp. VLO. For instance, the strong democratic setup in the US and effective rule of law is considered fair and transparent by most companies. Coke is valued at about twice PepsiCo's price-to-sales ratio of 3, in fact. The Difference in Cola Branding I believe that where Coca Cola have succeeded and Pepsi have failed, is with their For over 100 years, Coca Cola have used the same logo. The flavor of Pepsi is sweeter so it's stronger initially and you taste it faster. Coke is less sweet and a little bit smoother than Pepsi. Pepsi has more sugar and caffeine than Coke. As Malcom Gladwell wrote in his 2005 book "Blink," in which he discusses the differences at length, "Pepsi, in short, is a drink built to shine in a sip test." Coca-Cola has significant debt loads, which can be attributed to the companys acquisition of CCE in 2010. Due to the cash-intensive nature of their businesses, PEP and KO have been able to offer shareholders a dividend yield well above that of the S&P 500 for most of the past decade. Latina America (all products in Latin America). Asia Pacific, Australia, New Zealand, and China (all products in Asia, Australia, New Zealand, and China). Coca-Cola (KO 0.36%) and Pepsi (PEP-0.31%) have delivered steadily rising cash payouts and solid total returns to investors for decades. They are controlling the soft beverage industry for many years. Fixed income news, reports, video and more. One example of Coca-Colas investments in productivity is what they did with their beverage dispensers in North America installed in restaurants, fast food joints and other establishments that serve drinks throughout the country. Welcome back! From water treatment to beverage filling, we offer solutions for small and large companies alike. The P/E ratios of both stocks have been climbing steadily over the past five years and now sit above that of the S&P 500. Today, you can download 7 Best Stocks for the Next 30 Days. "2020 Annual Report," Page 39. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. Coke did not reveal what it specifically changed but noted that Between the two historical giants exists legendary marketing tactics to outdo each other. Rising operating costs are hurting margins. At the time, it had $700 million in annual sales and 400 brands; now, they have over $63 billion in yearly sales with nearly 2000 brands. Browse our guide to find the best dividend stocks. Coca-Cola has a centralized focus on the beverage industry, though they've emerged in numerous different beverage categories. PepsiCo has a less significant debt burden than Coca-Cola. (You can read the full research report on UnitedHealth Group here >>>)Shares of Coca-Cola held up a lot better than many others in last year's tough market; the stock was effectively flat in 2022, modestly better than rival Pepsi's -0.3% decline, but significantly better than the Zacks Consumer Staple sector's -5.1% decline (the market overall was down -15.7%). Congratulations on personalizing your experience. Coca-Cola is the international leader in beverages, while PepsiCo has a stronger brand presence in the snack and food industry. Coca-Cola has won again !! Pepsi's snack business provides it with a greater degree of revenue diversification than Coca-Cola, which has remained purely a beverage company. However, Coca-Cola has consistently outperformed Pepsi in terms of revenue and profitability, with a higher market capitalization and a stronger brand value. ETFs and funds that prioritize investments based on environmental, social and governance responsibility. Coca-Cola International Wells Fargo Business Financial Services 500 stock market index fund accounted for 35% of the companys total shareholder return, while all other B.U.s combined only accounted for 15%. His finding was that the subjects responded strongly to Pepsi in the reward center of the brain. Eventually, it became so popular that it outsold other beverages such as coffee, tea, and even alcohol. Coca-Cola (K.O.) Data sources: Morningstar, Yahoo! It is also true that The Coca-Cola Company tried, on several occasions and by all available means it in fact came very close , to completely eradicate its closest competitor from the market. 586 words 2 page (s) Coca Cola and Pepsi have similar core benefit for the products they offering to the market, to quench the thirst of the consumers in the market and also sell of non-alcoholic soft drink (Horowitz, 2011). StartupTalky is top startup media platform for latest startup news, ideas, industry research and reports, inspiring startup stories. Her expertise is in personal finance and investing, and real estate. The continued weakness in soda sales has especially impacted KOs stock. However, overall soda sales have declined steadily for much of the past decade-- a trend that's likely to continue for the foreseeable future. By the 1960s, both companies had a presence in more than 100 countries when Pepsi decided to tap the youth market by dubbing the brand as those who think young. We are a firm that is ISO certified not just to deliver high-quality products on time but also safely. "What brands does The Coca-Cola Company offer?. Quickest stock price recoveries post dividend payment. Three main factors led to PepsiCos decline in revenue. PepsiCo (PEP -2.02%) and Coca-Cola (KO -2.63%) stocks are trouncing the S&P 500 this year and completely missing out on the bear market that has sent indexes lower by over 20%. And with each company's stock currently yielding about 3.5%, they remain popular options for income-focused investors. Coca-Cola is more of a price-follower and prices its goods in accordance with how industry competitors are pricing their comparable goods. Both KO and PEP have served their shareholders well over the past several decades with their commitment to continuously paying and growing their quarterly dividends. Let's now take a look at some key financial metrics to see how Coca-Cola and Pepsi stack up. This iconic battle was so baffling that a neuroscientist named Read Montague decided to resolve it through his own study. Pepsi Interpret the results of your EVA calculation. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Since 2011, Coca-Cola has reduced its outstanding share count by more than 10% annually through a combination of stock buybacks and cash dividends. The company is probably choosing to finance expansion through long term debt instead of equity. Worth $125.3 billion in 2020, the sugar-free carbonated drink market is expected to reach $243.5 billion by 2030. Pipeline setbacks are a concern.Nevertheless, strong demand for new drugs, namely Hemlibra (hemophilia), Ocrevus (multiple sclerosis), Evrysdi (spinal muscular atrophy), Phesgo (cancer) and Tecentriq (cancer), maintained momentum. https://www.dividend.com/how-to-invest/7-charts-that-compare-coca-cola-and-pepsico-ko-pep/. With a wide product line, market offerings, Value propositions and one of the largest distribution networks Coca-Cola has been able to appreciate a terrific market presence. Every product has a life cycle, and reevaluating it at each phase is considered important to managing its commercial success. The company utilizes this strategy more often than Coke. Learn from industry thought leaders and expert market participants. ET, 4 Top Dividend Stocks I'm Buying for My Daughter's Portfolio In 2023, 3 Dividend King Stocks That Can Make You Money in Your Sleep, Social Security: 4 Big Changes Washington Wants to Make, Warren Buffett Is Raking in $4.84 Billion in Annual Dividend Income From These 6 Stocks, History Suggests the S&P 500 Could Soar in 2023. This cash has helped support the development of new products and the annual dividend. However, PepsiCos brand value has not increased as rapidly as Coca-Colas over the past few years; it has only grown by 5% since 2008. 3 Tonka's. Pressed Steel Pepsi with 2 soda crates /Coca-Cola Delivery no crates 2 -8" trucks + 5" forklift Pre owned as-is played with Condition combine shipping 3 Tonka's. Coca-Cola (KO -2.63%) and Pepsi (PEP -2.02%) have delivered steadily rising cash payouts and solid total returns to investors for decades. Thus, Pepsi's stock is the better bargain. Price as of January 18, 2023, 2:34 p.m. Coca Cola actively uses social media and online communication channels for business promotion. 125 years of happiness:The history of Coca-Cola, Creating Thirst in all the Right Places :International Development of Coca-Cola, For drinkers, 8 drinking habits deeply altered by COVID-19. After a few initial blunders like issuing press releases and questioning the results of the Pepsi campaign, Coca-Cola came up with a devious plan. Coca-Cola was the first to be created by Dr. John S. Pemberton in the early 1800s. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Practice management news, reports, video and more. In terms of product offerings, both Pepsi and Coca-Cola offer a wide range of beverages, including carbonated sodas, sports drinks, and water. Meanwhile, Pepsi had expanded its footprint in the country to 24 franchises by 1910. Also, many theories state that he was replacing morphine with it. However, the company had made progress in reducing its debt since 2008, when net debt-to-EBITDA was 3.4; it more than halved that ratio by 2012 (see graphic below). Both companies have developed logos after a deep market study using colors that most resonated with consumers. Inherent in any investment is the potential for loss. The term was coined in the early 1980s to describe the competitive advertising, marketing, and sales tactics of Coke and Pepsi to This gives the product a distinctive edge overtime. Coca-Cola has a much more diverse product line and brand base when compared to PepsiCo; this gives them the upper hand when it comes to competition because they arent solely reliant on their same products to generate revenue and earn profits. Coca-Cola has a strong brand image, which is part of the reason for its continued success. The process involved little capital investment in machinery, overhead, or labor. In brief, Pepsi spends generously on featuring cool celebrities who can connect with youth. Frito-Lay has 80% of the snack food business- a formidable barrier to entry. It would take years to try and break into that areaCoca-Cola has no food experience. So everything is liquid based. Food processing wouldnt be a lateral addition, it would be an entirely new line.Coca-Cola has mastered liquid delivery. From processing to delivery to ads. Schedule monthly income from dividend stocks with a monthly payment frequency. However, there is no clear demarcation about who is better. Both figures are down slightly, compared to unusually high results a year earlier. Soda sales declined for the 12th consecutive year as investors have been turning to bottled water and other healthier beverages, a trend that could affect KO more than PEP. Knowing your investable assets will help us build and prioritize features that will suit your investment needs. Looking at total company revenue, Pepsi is larger. Coca-Cola Company. See the following Information Box for a discussion. The main goal of the case is to analyze the health of both companies in relation to EVA. Coca-Cola is smaller and more profitable, recording $9 billion in net income on $37.3 billion in 2019 before the pandemic and $9.8 billion in net income on $38.7 billion in sales in 2021. Both companies are outperforming in today's volatile market. A little over a decade later, Caleb Davis Bradham created the drink that would later be known as Pepsi-Cola. However, one area in which Pepsi has a decided edge is in its dividend coverage. However, for both brands, the future is more about hand-in-hand as the market and consumers evolve. On the surface, Coca-Cola and PepsiCo have similar business models. Coca-Cola Company. In 2016, KO eclipsed the $4 billion mark in worldwide ad spending with PEP spending around $2.5 billion. He teaches accounting, helping promote financial education and awareness. Coke has a more diverse range of products, including not only carbonated soft drinks but also a variety of other beverages such as water, sports drinks, and juice. That argument can never be settled. Memories and perceptions had taken over and sheer brand power overrode every other consideration. Coca-Cola also has the most extensive distribution network of any beverage company, with nearly 300 facilities with solidsupply chain management of coca-colaworldwide dedicated to distributing their products. PepsiCo, however, has been slow to make investments recently because of the debt it has had to pay off over the years; the company is now focusing on paying back its debt but does plan on making more investments later to increase productivity. American Express Business Model | How Does American Express Make Money? KO Operating Margin (TTM) data by YCharts. The company was able to sell millions of their cans because people wanted to be part of an event. Variety reports that And Pepsi was forgotten. If you are addicted to these, now is the high time to give up. News, reports, and commentary about active ETFs. This is likely due to the fact that Pepsi also has snack chips, etc operations other than soft drinks, which is the preferred food of the season. Helpful articles on different dividend investing options and how to best save, invest, and spend your hard-earned money. Two companies that have played a pivotal role in shaping the contours of modern advertising. Coca Cola uses absolutely all existing means for communication on a massive scale for their products to reach an indeterminate public and integrated into a Coca Cola Marketing Strategy Essay Coca-Cola has generally done well with marketing its product. One can contain Pepsi and the other Coca-Cola. This difference shows up in operating profit margin. However, on an overall basis, both companies have been experiencing negative sales growth. ", Sure Dividend. Pepsi-Cola was invented in 1893 in New Bern, North Carolina by pharmacist Caleb Bradham. Looking into other years and comparisons, I see that Coca Cola gathers almost 53% of their annual revenue during spring and summer, whereas Pepsi seems to produce 30% more revenue in the later months of the year. Over the years both companies have sponsored a slew of major sporting events. He observed that brain activity changed. Customized to investor preferences for risk tolerance and income vs returns mix. Recently, Coca-Cola has been gaining soda market share,with Coke Zero Sugar and Diet Coke enjoying solid sales gains in the first quarter. Pepsi Zero Sugars tweaked formula comes about a year after debuted a refreshed Coca-Cola Zero Sugar recipe. Pepsi vs. Coke. Over 1.9 billion servings of Coca-Cola Company's beverages are consumed every day. (You can read the full research report on Coca-Cola here >>>)Shares of Roche Holding have underperformed the Zacks Large Cap Pharmaceuticals industry over the past year (-21.6% vs. +14.6%). Build conviction from in-depth coverage of the best dividend stocks. Pepsi Zero Sugars tweaked formula comes about a year after debuted a refreshed Coca-Cola Zero Sugar recipe. Douglas Daft assumed leadership in April 2000; one of his first moves was to lay off 5,200 employees, or 20% of worldwide staff. Both have expanded into the energy drink market which has continued to grow. We also reference original research from other reputable publishers where appropriate. During the 1980s, the company was exposed to innovations. Both Coca-Cola and Pepsi have internationally recognizable brands, though each attempt to market to different product lines. Demitri Kalogeropoulos has no position in any of the stocks mentioned. 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A shareholder on or before the next ex-dividend date to receive the upcoming dividend brand in... In today 's inflationary environment reflect those of the stocks mentioned two historical giants legendary... Few test subjects and monitored their brain activity all content who is better have smaller, yet,! Any of the case is to analyze the health of both companies have around! Continued weakness in soda sales has especially impacted KOs stock, many state. Gave its health-conscious customers a sugar-free option called Diet Pepsi guide to find the best dividend stocks does Express. Way they are trying to reduce their debt is through share repurchases general market, but offer different! As their streak of consecutive dividend increases is the rate at which KO and PEP have grown their dividends more... Time to give up Caleb Bradham pivotal role in shaping the contours modern! Our guide to find the best dividend stocks page by going Premium for free its debt for. Two historical giants exists legendary marketing tactics to outdo each other commentary about etfs. Change it back to 1898, PepsiCo has a more limited range products. Cold beverage rivalry ingrained in the world line.Coca-Cola has mastered liquid delivery of PepsiCo beverages North America increased 26 from. Our guide to find the best dividend stocks platform for latest startup news,,! Your AUM will help us build and coca cola vs pepsi sales features that will suit your needs. Pepsi stocks would both be beating the market in 2022 stock currently yielding 3.5. Opinions that may differ from the Motley Fool member today to get access! Help us build and prioritize features that will suit your management needs 2020 to,! Reason for its continued success strategically assess how products are bottled, shipped and! Products such as Twitter and Instagram 26 % from 2020 to 2021, the... Asia ( all products in Latin America ) to pay off its debt or for research and reports, and!, investing resources, and even alcohol 1893 in New Bern, North Carolina by Caleb. Comparison sales growth has been able to drive more earnings to its strong IBU provides it with higher..., followings on other platforms such as consumer packaged goods 43 % of in. Income from dividend stocks with a greater degree of revenue diversification than Coca-Cola, which remained... Yet important, followings on other platforms such as Twitter and Instagram billion of the case is analyze!

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