Bufetico
Dale Hemminger watched New York lose ground in the milk business for most of his career.
He owns Hemdale Farms in Ontario County. New York was the number two dairy state when he got out of high school, he said, and recently it was number five. In August, in a Spectrum News story about a new plant near Rochester, he said “great companies like Fairlife and others are coming back to New York.” Many energy drinks have milk components in them now, he added, and local processors and buyers, fairlife among them, are a big part of that.
The plant is fairlife’s, the milk brand Coca-Cola owns. It’s a $650 million plant in Webster, and at full production it’ll take in five to six million pounds of milk a day from New York farms. Becca Kerr, who runs fairlife, called it one of the largest capital investments Coca-Cola has ever made, and said demand for fairlife’s products has never been higher.
For farmers like Hemminger, that’s a buyer. Governor Kathy Hochul said the plant will give the state’s dairy farmers a dependable market, and at the ribbon cutting she told Kerr that Webster is the next place for fairlife to expand.
So that new buyer belongs to a company that spent 2024 and 2025 paying its shareholders more than its business brought in. Last year Coca-Cola paid $8,779 million in dividends, and the business itself brought in $7,408 million of cash. The year before, $8,359 million went out and $6,805 million came in. And in February the board raised the dividend again, for the 64th year in a row.
Profit and cash sit in different pockets
A dividend goes out the door as cash, so that’s what I measure it against. Last year’s dividend was 67 percent of profit, which sounds comfortable, and 119 percent of the cash the business brought in.
That’s when I open the cash flow statement in the annual report, the page that shows where the money came from and where it went. I look at what’s sitting inside the operating number, the cash that came from running the business. At Coca-Cola there are two big payments in there, one in each year, and neither one was a cost of running the business that year.
The two payments
One of them is the brand Hemminger was talking about. When Coca-Cola bought the rest of fairlife in 2020, the deal tied the final price to how well fairlife did through 2024, with no ceiling. It did well. The last payment went out in March 2025, $6.2 billion, and $6.1 billion of it went through the cash from running the business. That one payment was more than nine times the $650 million Webster plant.
The other is a long way from any dairy farm. It’s a fight with the IRS over how much of the profit made abroad the U.S. company should pay tax on. Both sides had agreed on a formula, and the IRS signed off on it in five audits in a row before switching to a different one for 2007 through 2009. The Tax Court mostly sided with the IRS, so in September 2024 Coca-Cola put down $6.0 billion, the tax plus interest, as a deposit that stops more interest from piling up while it appeals. If it wins, the money comes back, all of it or part of it.
Put the two payments back and the business brought in something like $12.8 billion in 2024 and $13.5 billion in 2025. In 2023, a year with no payment anywhere near that size, it brought in $11,599 million. So the cash from the business kept growing, with a giant bill sitting on top of it each year.
Coca-Cola covered the gap between the dividend and the cash mostly by selling bottlers. It sold its bottling business in the Philippines, its stake in Coke Consolidated (a U.S. bottler) and part of its bottler in India, and in 2024 it also borrowed more than it paid back. Buybacks, the money a company spends buying back its own shares, went down in 2024 and again in 2025 while the dividend kept going up. The company’s own list of priorities puts growing the dividend second and buybacks last.
Where this breaks
Both payments were real cash out the door, and the tax money might never come back. Adding it back only works if Coca-Cola wins its appeal. The federal appeals court heard the case on June 25 and hasn’t ruled. If the IRS wins, some or all of the $6.0 billion stays with the IRS. In that case the company puts the years since, 2010 through 2025, at about $14 billion more, and it says the IRS’s formula would raise its yearly tax bill too.
I got the $12.8 and $13.5 billion myself, by adding the two payments back to the cash the company reported. Other things moved inside the cash flow statement in those years too, like a lift in 2024 from selling customers’ unpaid bills to banks, and tax deposits in Israel and Vietnam in 2025. I only pulled out the two that are big enough to cover the gap.
Hemminger’s great company, on Coca-Cola’s books
Hemminger called fairlife a great company. On Coca-Cola’s books, for a while, that looked like bad news. The better fairlife did, the bigger that last bill got, and Coca-Cola had to book every increase against its profit: $3,109 million in 2024 alone, months before the cash went out. When the deal closed in 2020, Coca-Cola valued everything it might owe fairlife’s sellers at $270 million.