PROJECT REPORT ON COCA-COLA COMPANYdocshare04.docshare.tips/files/5726/57265700.pdf“Project Report on Coca-Cola Company and study of customerpreference for Coca-Cola brands with

“Project Report on Coca-Cola Company and study of customerpreference for Coca-Cola brands with reference to Coca-ColaIndia”

PROJECT REPORT ONCOCA-COLACOMPANY

SUBMITTED BY:

• MUTHU KUMARAN (94)• NIDA MAJEED (103)• RAGHAV KUMAR (125)• RAHUL KALIA (126)• RAHUL NAGPAL (127)• SIMRAN KAUR PAHUJA (192)

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SUBMITTED TO:DR. KARTIK DAVE

CONTENTSEXECUTIVE SUMMARY- PAGE 2

CHAPTER 1 INTRODUCTION- PAGE 4-6

CHAPTER 2 INDUSTRY PROFILE- PAGE 7-11

CHAPTER 3 COMPANY PROFILE- PAGE 12-63

COCA-COLA COMPANY- PAGE 13-17GLOBAL MARKET SHARE OF COCA-COLA- PAGE 17-18TRENDS AND FORCES- PAGE 19-22POTER’S FIVE FORCES- PAGE 22-29

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PESTLE ANALYSIS- PAGE 29-33SWOT ANALYSIS- PAGE 33-40COCA-COLA INDIA- PAGE 41-42PRODUCTS IN INDIA- PAGE 42-46MARKETING MIX- PAGE 49-58PESTLE ANALYSIS- PAGE 58-62SWOT ANALYSIS- PAGE 60-62

CHAPTER 4 RESEARCH METHODOLOGY- PAGE 63-68

CHAPTER 5 DATA ANALYSIS- PAGE 69-79

CHAPTER 6 SUGGESTIONS AND CONCLUSION- PAGE 80-82

BIBLIOGRAPHY- PAGE 83

ANNEXURE- PAGE 84-85

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EXECUTIVESUMMARY

This report has been prepared with a specific purpose in mind. It outlines the

history and current scenario of the Coca-Cola Company globally and locally.

The first part of the study takes us through the present state of affairs of the

beverage industry and Coca-Cola Company globally.

The report contains a brief introduction of Coca Cola Company and Coca-Cola

India and a detailed view of the tasks, which have been undertaken to analyze

the market of Coca-Cola i.e. we have performed Competitive, PESTLE and

SWOT analysis of Coca-Cola Company and PESTLE and SWOT analysis ofCoca-Cola India in order to identify areas of potential growth for Coca-Cola.

We have also given a brief description of Trends and Forces that are affecting

Coca-Cola Company globally.

The main objective of this project report is to analyze and study in efficient way

the current position of Coca- Cola Company. The study also aims to perform

Market Analysis of Coca-Cola Company & find out different factors effecting

the growth of Coca-Cola. Another objective of the study was to perform

Competitive analysis between Coca-Cola and its competitors. Apart from these

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objectives this study is also conducted to understand the Customer preferences

towards various Coca-Cola products.

1.INTRODUCTION

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INTRODUCTON

Let reason go before every enterprise,

And counsel before every action

Research is a human activity based on intellectual investigation and is aimed at

discovering, interpreting, and revising human knowledge on different aspects of

the world.

MARKETING RESEARCH:-

Marketing research is the function that links the consumer, customer and public

to the marketer through information used to identify and define marketing

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opportunities and problems; generate, refine, and evaluate marketing actions;

monitor marketing performance; and improve understanding of marketing as aprocess. Marketing research specifies the information required to address these

issues, designs the methods for collecting information, manages and

implements the data collection process, analyzes and communicates the

findings and their implications.

- American Marketing Association

Marketing research is about researching the whole company’s marketing

process.

- Palmer (2000)

INTRODUCTION TO COCA-COLA

Coca-Cola, the product that has given the world its best-known taste was born in Atlanta,Georgia, on May 8, 1886. Coca-Cola Company is the world’s leading manufacturer,marketer and distributor of non-alcoholic beverage concentrates and syrups, used to producenearly 400 beverage brands. It sells beverage concentrates and syrups to bottling and canningoperators, distributors, fountain retailers and fountain wholesalers. The Company’s beverageproducts comprises of bottled and canned soft drinks as well as concentrates, syrups and not-ready-to-drink powder products. In addition to this, it also produces and markets sportsdrinks, tea and coffee. The Coca- Cola Company began building its global network in the1920s. Now operating in more than 200 countries and producing nearly 400 brands, the

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Coca-Cola system has successfully applied a simple formula on a global scale: “Provide amoment of refreshment for a small amount of money- a billion times a day.”

The Coca-Cola Company and its network of bottlers comprise the most sophisticated andpervasive production and distribution system in the world. More than anything, that systemis dedicated to people working long and hard to sell the products manufactured by theCompany. This unique worldwide system has made The Coca-Cola Company the world’spremier soft-drink enterprise. From Boston to Beijing, from Montreal to Moscow, Coca-Cola, more than any other consumer product, has brought pleasure to thirsty consumersaround the globe. For more than 115 years, Coca-Cola has created a special moment ofpleasure for hundreds of millions of people every day.The Company aims at increasing shareowner value over time. It accomplishes this byworking with its business partners to deliver satisfaction and value to consumers through aworldwide system of superior brands and services, thus increasing brand equity on a globalbasis. They aim at managing their business well with people who are strongly committed tothe Company values and culture and providing an appropriately controlled environment, tomeet business goals and objectives. The associates of this Company jointly takeresponsibility to ensure compliance with the framework of policies and protect theCompany’s assets and resources whilst limiting business risks.

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2.INDUSTRY PROFILE

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INDUSTRY PROFILE

A BRIEF INSIGHT - THE FMCG INDUSTRY IN INDIA

Fast Moving Consumer Goods (FMCG), also known as Consumer Packaged Goods (CPG)are products that have a quick turnover and relatively low cost. Consumers generally put lessthought into the purchase of FMCG than they do for other products.

The Indian FMCG industry witnessed significant changes through the 1990s. Many playershad been facing severe problems on account of increased competition from small andregional players and from slow growth across its various product categories. As a result,most of the companies were forced to revamp their product, marketing, distribution andcustomer service strategies to strengthen their position in the market.

By the turn of the 20th century, the face of the Indian FMCG industry had changedsignificantly. With the liberalization and growth of the Indian economy, the Indian customerwitnessed an increasing exposure to new domestic and foreign products through different

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media, such as television and the Internet. Apart from this, social changes such as increase inthe number of nuclear families and the growing number of working couples resulting inincreased spending power also contributed to the increase in the Indian consumers' personalconsumption. The realization of the customer's growing awareness and the need to meetchanging requirements and preferences on account of changing lifestyles required the FMCGproducing companies to formulate customer-centric strategies. These changes had a positiveimpact, leading to the rapid growth in the FMCG industry. Increased availability of retailspace, rapid urbanization, and qualified manpower also boosted the growth of the organizedretailing sector.

HLL led the way in revolutionizing the product, market, distribution and service formats ofthe FMCG industry by focusing on rural markets, direct distribution, creating new product,distribution and service formats. The FMCG sector also received a boost by government ledinitiatives in the 2003 budget such as the setting up of excise free zones in various parts ofthe country that witnessed firms moving away from outsourcing to manufacturing byinvesting in the zones.Though the absolute profit made on FMCG products is relatively small, they generally sell inlarge numbers and so the cumulative profit on such products can be large. Unlike someindustries, such as automobiles, computers, and airlines, FMCG does not suffer from masslayoffs every time the economy starts to dip. A person may put off buying a car but he willnot put off having his dinner.

Unlike other economy sectors, FMCG share float in a steady manner irrespective of globalmarket dip, because they generally satisfy rather fundamental, as opposed to luxurious needs.The FMCG sector, which is growing at the rate of 9% is the fourth largest sector in theIndian Economy and is worth Rs.93000 cr. The main contributor, making up 32% of thesector, is the South Indian region. It is predicted that in the year 2010, the FMCG sector will

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be worth Rs.143000 cr. The sector being one of the biggest sectors of the Indian Economyprovides up to 4 million jobs. (Source: HCCBPL, Monthly

Circular)

A BRIEF INSIGHT- BEVERAGE INDUSTRY IN INDIA

In India, beverages form an important part of the lives of people. It is an industry, in whichthe players constantly innovate, in order to come up with better products to gain moreconsumers and satisfy the existing consumers.

Fig 2.0 BEVERAGES IN INDIA

The beverage industry is vast and there various ways of segmenting it, so as to cater theright product to the right person. The different ways of segmenting it are as follows:

Alcoholic, non-alcoholic and sports beverages.Natural and Synthetic beverages.In-home consumption and out of home on premises consumption.Age wise segmentation i.e. beverages for kids, for adults and for senior citizens.Segmentation based on the amount of consumption i.e. high levels of consumptionand low levels of

consumption.

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If the behavioural patterns of consumers in India are closely noticed, it could be observedthat consumers perceive beverages in two different ways i.e. beverages are a luxury andthat beverages have to be consumed occasionally. These two perceptions are the biggestchallenges faced by the beverage industry. In order to leverage the beverage industry, it isimportant to address this issue so as to encourage regular consumption as well as and tomake the industry more affordable.

Four strong strategic elements to increase consumption of the products of the beverageindustry in India are:

The quality and the consistency of beverages needs to be enhanced so that consumersare satisfied and they enjoy consuming

beverages.The credibility and trust needs to be built so that there is a very strong and safefeeling that the consumers have while consuming the

beverages.Consumer education is a must to bring out benefits of beverage consumptionwhether in terms of health, taste, relaxation, stimulation, refreshment, well-being

orprestige relevant to the category.Communication should be relevant and trendy so that consumers are able to find

an appeal to go out, purchase and consume.The beverage market has still to achieve greater penetration and also a wider

spreadof distribution. It is important to look at the entire beverage market, as a bigopportunity, for brand and sales growth in turn to add up to the overall growth ofthe food and beverage industry in the economy.

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3.

COMPANY PROFILE

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COMPANY PROFILE

MISSION:

Our Roadmap starts with our mission, which is enduring. It declares our purpose as acompany and serves as the standard against which we weigh our actions and decisions.

To refresh the world...To inspire moments of optimism and happiness...To create value and make a difference.V

ISION: Our vision serves as the framework for our Roadmap and guides every aspect of our business

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by describing what we need to accomplish in order to continue achieving sustainable, qualitygrowth.

People:

Be a great place to work where people are inspired to be the best they can be.Portfolio

:Bring to the world a portfolio of quality beverage brands that anticipateand satisfy people's desires and

needs.Partners:

Nurture a winning network of customers and suppliers, together we createmutual, enduring

value.Planet:

Be a responsible citizen that makes a difference by helping build and supportsustainable

communities.

Profit:

Maximize long-term return to shareowners while being mindful of our overallresponsibilities

.Productivity:

Be a highly effective, lean and fast-moving organization.WINNING CULTURE:

Our Winning Culture defines the attitudes and behaviours that will be required of us to makeour 2020 Vision a reality.

LIVE OURV

ALUES :

Our values serve as a compass for our actions and describe how we behave in the world. Leadership

:The courage to shape a better future.Collaboration: Leverage collective

genius.Integrity:

Be real.Accountability

:If it is to be, it's up to me.Passion: Committed in heart and

mind.Diversity:

As inclusive as our brands.Quality: What we do, we do

well.FOCUS ON THE MARKET:

Focus on needs of our consumers, customers and franchise partners.Get out into the market and listen, observe and learn.Possess a world view.

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Focus on execution in the marketplace every day.Be insatiably curious.W

ORK SMART:Act with urgency.Remain responsive to change.Have the courage to change course when needed.Remain constructively discontent.Work efficiently.

ACT LIKE OWNERS:Be accountable for our actions and

inactions.Steward system assets and focus on building value.Reward our people for taking risks and finding better ways to solve problems.Learn from our outcomes -- what worked and what didn’t.BE THE BRAND:

Inspire creativity, passion, optimism and fun. HISTORY OF COCA-

COLAThe prototype Coca-Cola recipe was formulated at the Eagle Drug and Chemical Company, adrugstore in Columbus, Georgia by John Pemberton, originally as a coca wine calledPemberton's French Wine Coca. He may have been inspired by the formidable success of VinMariani, a European cocawine.In 1886, when Atlanta and Fulton County passed prohibition legislation, Pembertonresponded by developing Coca-Cola, essentially a non-alcoholic version of French WineCoca. The first sales were at Jacob's Pharmacy in Atlanta, Georgia, on May 8, 1886. It wasinitially sold as a patent medicine for five cents a glass at soda fountains, which were popularin the United States at the time due to the belief that carbonated water was good for the

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health.

Pemberton claimed Coca-Cola cured many diseases, including morphine addiction,

[9]

dyspepsia, neurasthenia, headache, and impotence. Pemberton ran the first advertisement forthe beverage on May 29 of the same year in the

Atlanta Journal.

By 1888, three versions of Coca-Cola — sold by three separate businesses — were on themarket. Asa Griggs Candler acquired a stake in Pemberton's company in 1887 andincorporated it as the Coca Cola Company in 1888. The same year, while suffering from anongoing addiction to morphine, Pemberton sold the rights a second time to four morebusinessmen: J.C. Mayfield, A.O. Murphey, C.O. Mullahy and E.H. Bloodworth. Meanwhile,Pemberton's alcoholic son Charley Pemberton began selling his own version of the product.

John Pemberton declared that the name "Coca-Cola" belonged to Charley, but the other twomanufacturers could continue to use the formula. So, in the summer of 1888, Candler sold hisbeverage under the names Yum Yum and Koke. After both failed to catch on, Candler set outto establish a legal claim to Coca-Cola in late 1888, in order to force his two competitors outof the business. Candler purchased exclusive rights to the formula from John Pemberton,Margaret Dozier and Woolfolk Walker. However, in 1914, Dozier came forward to claim hersignature on the bill of sale had been forged, and subsequent analysis has indicated JohnPemberton's signature was most likely a forgery as well.In 1892 Candler incorporated a second company, The Coca-Cola Company (the currentcorporation), and in 1910 Candler had the earliest records of the company burned, furtherobscuring its legal origins. By the time of its 50th anniversary, the drink had reached thestatus of a national icon in the USA. In 1935, it was certified kosher by Rabbi Tobias Geffen,after the company made minor changes in the sourcing of some ingredients.Coca-Cola was sold in bottles for the first time on March 12, 1894. The first outdoor walladvertisement was painted in the same year as well in Cartersville, Georgia. Cans of C okefirst appeared in 1955. The first bottling of Coca-Cola occurred in Vicksburg, Mississippi, atthe Biedenharn Candy Company in 1891. Its proprietor was Joseph A. Biedenharn. The

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original bottles were Biedenharn bottles, very different from the much later hobble-skirtdesign that is now so familiar. Asa Candler was tentative about bottling the drink, but twoentrepreneurs from Chattanooga, Tennessee, Benjamin F. Thomas and Joseph B. Whitehead,proposed the idea and were so persuasive that Candler signed a contract giving them controlof the procedure for only one dollar. Candler never collected his dollar, but in 1899Chattanooga became the site of the first Coca-Cola bottling company. The loosely termedcontract proved to be problematic for the company for decades to come. Legal matters werenot helped by the decision of the bottlers to subcontract to other companies, effectivelybecoming parent bottlers. Coke concentrate, or Coke syrup, was and is sold separately atpharmacies in small quantities, as an over-the-counter remedy for nausea or mildly upsetstomach.

On April 23, 1985, Coca-Cola, amid much publicity, attempted to change the formula of thedrink with "New Coke". Follow-up taste tests revealed that most consumers preferred thetaste of New Coke to both Coke and Pepsi, but Coca-Cola management was unprepared forthe public's nostalgia for the old drink, leading to a backlash. The company gave in toprotests and returned to a variation of the old formula, under the name Coca-Cola Classic onJuly 10, 1985.

On February 7, 2005, the Coca-Cola Company announced that in the second quarter of 2005they planned to launch a Diet Coke product sweetened with the artificial sweetener sucralose,the same sweetener currently used in Pepsi One. On March 21, 2005, it announced anotherdiet product, Coca-Cola Zero, sweetened partly with a blend of aspartame and acesulfamepotassium. In 2007, Coca-Cola began to sell a new "healthy soda": Diet Coke with vitaminsB , B , magnesium, niacin, and zinc, marketed as "Diet Coke Plus”. On July 5, 2005, it

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revealed that Coca-Cola would resume operations in Iraq for the first time since the ArabLeague boycotted the company in 1968.

In April 2007, in Canada, the name "Coca-Cola Classic" was changed back to "Coca-Cola."

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The word "Classic" was truncated because "New Coke" was no longer in production,eliminating the need to differentiate between the two. The formula remained unchanged.In January 2009, Coca-Cola stopped printing the word "Classic" on the labels of 16-ouncebottles sold in parts of the southeastern United States. The change is part of a larger strategyto rejuvenate the product's image. In November 2009, due to a dispute over wholesale pricesof Coca-Cola products, Costco stopped restocking its shelves with Coke and Diet Coke.GLOBAL MARKET SHARE OF COCA-COLA

In 2009, the company generated revenues of $31 billion with $6.8 billion net income. Anincreased consumer preference for healthier drinks has resulted in slowing growth rates forsales of carbonated soft drinks (abbreviated as CSD), which constitutes 78% of KO’s sales.KO’s profits are also vulnerable to the volatile costs for the raw materials used to makedrinks - such as the corn syrup used as a sweetener, the aluminium used in cans, and theplastic used in bottles. Furthermore, slowing consumer spending in Coke's large NorthAmerican market compounds the challenge of increasing costs and a weak economicenvironment. Finally, Coca-Cola earns approximately 75% of revenue from internationalsales, exposing it to currency fluctuations, which are particularly adverse with a stronger U.S.Dollar (USD).Despite these challenges, Coca-Cola has remained profitable. Though the non-CSD market isgrowing quickly, the traditional CSD market is still large in terms of both revenues andvolume and highly lucrative. The size and variety of KO’s offerings in the CSD category,coupled with the unparalleled brand equity of the Coca-Cola trademark, has allowed KO tomaintain its share of this important market. KO has also responded to consumers’ changingtastes with new, non-CSD product launches and acquisitions such as that of Glaceau in 2007.Strong international growth has also more than offset a weak domestic market.On February 25, Coca-Cola Company announced its plan to buy Coca-Cola Enterprises(CCE) for $12.3 million. Since spinning of Coca-Cola Enterprises (CCE) 24 years ago,

the[7]

soft drink market has changed dramatically with consumers buying fewer soft drinks andmore non-carbonated beverages, such as Powerade and Dasani water. Under the new deal,

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Coca-Cola Company will take control of the bottler's North America operations, giving thecompany control over 90% of the total North America volume. In return, Coca-ColaEnterprises will take over Coke's bottling operations in Norway and Sweden, becoming aEuropean-focused producer and distributor.In March 2010, Coca-Cola Company entered into discussions to buy the Russian juicecompany, OAO Nidan Juices. The company is 75% owned by a private equity firm inLondon and 25% by its Russian founders and controls 14.5% of the Russian juice market. Ifsuccessful, the purchase would add to Coca-Cola's 20.5% market share, passing Pepsi's 30%market share. The Russian juice market is estimated to be $3.2 billion dollars, and estimatesof Nidan's purchase price are between $560-$620 million.In April 2010, Coca-Cola Company purchased a majority share of Innocent, the British fruitsmoothie maker. Last year the company bought an 18% share of the company for more than$45 million, and recent purchases of additional shares increased Coke's stake to 58%.In June 2010, Coca-Cola Company agreed to pay Dr Pepper Snapple Group (DPS) $715million for the continued right to sell their products following the company's acquisition ofCoca-Cola Enterprises (CCE). The deal covers the next 20 years with an option to renew foran additional 20 years.

TRENDS AND FORCES

The Global Economic Recession Threatens Overall Demand:

In 2008 and 2009, the global economy has fallen into a recession. Not just the United Statesbut countries from all over the world have felt the impacts of the 2008 Financial Crisis. Thismay be a problem for Coke, which derives approximately 75% of its sales from outside NorthAmerica. Still, the company has positioned itself well in international markets bothorganically and through acquisitions, such as that of Chinese juice maker Huiyuan for $2.4billion. However the company was unsuccessful with its purchase of Huiyuan as it broke

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antitrust laws in China. On March 5, 2010, Coke's CEO said that emerging markets arebouncing back quicker than more developed markets.

New Aversionto Soda Threatens Main Business:

74% of the Coca Cola Company's products are classified as carbonated soft drinks, making itparticularly sensitive to changes in demand for CSD. Consumer demand for CSD has beennegatively affected by concerns about health and wellness. This is true across most of KO'smarkets. There has been an increase in the number of regulations regarding CSD in theUnited States in response to the heightened desire for healthy food consumption.In 2006, many state public school systems banned the sale of soft drinks on their campuses.The C entre for Science and Public Interest proposed that a warning label be placed on allbeverages containing more than 13g of sugar per 12-oz serving. This proposal would affectall non-diet, full calorie drinks produced by KO. These factors have driven a shift inconsumption away from CSD to healthier alternatives, such as tea, juices, and water.Within the CSD segment consumers have been moving away from sugared drinks, optinginstead for diet beverages, which do not generally contain any sugar or calories.Though KO has been somewhat slow to respond to this shift in consumer preferences, it hasrecently begun to increase its development of both diet CSD and non-CSD beverages. KO isfaced with the task of balancing the risk of new innovations with the low growth rates ofestablished brands, a predicament for manufactures throughout the beverage industry.

Integrated Bottler Strategy Increases Flexibility:

After CEO Neville Isdell was brought out of retirement in 2004 to revive the then flaggingbeverage maker, one of the first areas that he targeted for improvement was KO's frayedrelations with its extensive network of bottlers. Since consolidating all company-ownedbottlers into the Bottling Investments division, Isdell has continued to increase KO's interestin its bottlers through stake purchases or outright buyouts. This strategy represents a

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weakening of the division between KO's production and distribution operations. Isdellbelieves that by combining production and distribution operations the company will haveenhanced its ability to quickly respond to changing market conditions. In KO's 2007 Q3Analyst call, Isdell credited the outright purchase of Coca-Cola Bottlers Philippines (CCBPI)for double-digit volume growth in that country. Additionally, KO has signed new agreementswith many of its bottlers which allow them to distribute drinks produced by other companies.For example, Coca-Cola Enterprises (CCE) now distributes Arizona, a ready-to-drink teamade by Ferolito, Vultaggio & Sons, an American iced-tea company. Isdell sees theseagreements as another way of taking advantage of the rapidly growing non-CSD market.

Bottled Water Falling Out of Favour:

In Q3 2009, Dasani bottled water's revenues fell by double digits; this decrease is emblematicof the bottled water industry as a whole. In August 2009, the Wall Street Journal reported thatsales of bottled water had fallen for the first time in five years.

The combination of therecession and upper class consumers' increased environmental

consciousnesshas lead manycustomers to cut back on bottled water in favour of tap water and reusable

containers.Follow

ing this trend, at least one town in Washington state and one in Australia have outlawed theselling of bottled water within their city limits. In 2008, bottled water was the third mostpopular beverage (behind soda and milk), but compared to 2007, Americans consumptiondeclined for the first time, down to 8.7 billion gallons from 8.8 billion gallons.

Although this

is a seemingly small decrease, industry experts don't expect bottled water to bounce backanytime soon.

Dollar Affects International Performance:

Another trend affecting Coca-Cola is the relative strength of the U.S. Dollar (USD). Althoughthe company is based in the US, KO derives about 75% of its operating income from outside

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United States. Because of this, the company is very sensitive to the strength of the dollar. Asforeign currencies weaken relative to the dollar, goods sold in foreign markets are suddenlyworth fewer dollars back in the US, lowering earnings. Thus, if the dollar strengthens (as itdid in the second half of 2008 and 2009), it has a negative effect on KO's earnings. Coca-Cola executives expect currency fluctuations to adversely affect 3Q09 operating income by10-12% and 4Q09 operating income by high single digits.KO has broad exposure to foreign currencies and actively hedges a large portion of these toavoid wide swings in earnings from currency fluctuations. Although this hedging insulatesfrom the potential downside of a strengthening dollar, it also limits larger gains from drasticdownswings in the dollar's value.

Commodity Cost FluctuationsAffect Margins:

The C oca-Cola Company’s profitability can be affected both directly and indirectly by thecosts of various production inputs. KO itself is responsible for purchasing the raw materialsused to make its concentrates and syrups. Variations in the prices for these goods can affectthe company’s total cost of production as well as its profit margins. Changes in theproduction costs of bottlers can also impact KO’s profitability, though in a more indirect way.If the raw materials necessary for bottling become more expensive, the bottler may be forcedto drastically raise prices to compensate.S

uch a price increase would likely hurt KO, given the competitive nature of the non-alcoholicbeverage industry, and provide a possible incentive for consumers to switch to othercompanies’ beverages.Aluminium, corn, and PET resin are three examples of such production goods used bybottlers that could have significant bearing on the Coca-Cola Company’s profit margins. In2007, the prices of these commodities rose drastically with general commodities bubble anddramatically pressured margins. They receded in 2008, but the possibility of another

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significant rise in Commodities represents a constant threat to profits.

POTER’S FIVE FORCES

RIVALRY AMONG EXISTING FIRMS:

The greatest competition that Coca-cola faces is from the rival sellers within the industry.Coca-Cola, Pepsi Co, and Cadbury Schweppes are among the largest competitors in this

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industry, and they are all globally established which creates a great amount of competition.Aside from these major players, smaller companies such as Cott Corporation and NationalBeverage Company make up the remaining market share. All five of these companies make aportion of their profits outside of the United States.

Though Coca-Cola owns four of the top five soft drink brands (Coca-Cola, Diet Coke, Fanta,and Sprite), it had lower sales in 2005 than did PepsiCo (Murray, 2006c). However, Coca-Cola has higher sales in the global market than PepsiCo, PepsiCo is the main competitor forCoca-Cola and these two brands have been in a power struggle for years (Murray, 2006c).Coke has been more dominant with a 53% of market share as in 1999 compared to Pepsi witha market share of 21%.

According to Beverage Digest's 2008 report on carbonated soft drinks, PepsiCo's U.S. marketshare has increased to 30.8%, while the Coca-Cola C ompany's has decreased to 42.7% due toPepsi marketing schemes still the higher large gap between the market share can be attributedto the fact that Coca-Cola took advantage of Pepsi entering the market late and has set up itsbottler's and distribution network especially in developed markets.

"The Coca-Cola Company" is the largest soft drink company in the world. Every year800,000,000 servings of just "Coca-Cola" are sold in the United States alone. Bottling plants

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with some exceptions are locally owned and operated by independent business people whoare native to the nations in which they are located. Coca-Cola manufactures, distributes andmarkets non-alcoholic beverage concentrates and syrups, including fountain syrups.

It supplies concentrates and beverage bases used to make the products and providesmanagement assistance to help it's bottler's ensure the profitable growth of their business.This has put Pepsi at a significant disadvantage compared to US market. Overall, Coca-Colacontinues to outsell Pepsi in almost all areas of the world. However, exceptions include India,Saudi Arabia and Pakistan.

By most accounts, Coca-Cola was India's leading soft drink until 1977 when it left India aftera new government ordered, The Coca-Cola Company to turn over its secret formula for Cokeand dilute its stake in its Indian unit as required by the Foreign Exchange Regulation Act(FERA).

In 1988, PepsiCo gained entry to India by creating a joint venture with the Punjabgovernment-owned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited.This joint venture marketed and sold Lehar Pepsi until 1991 when the use of foreign brandswas allowed. PepsiCo bought out its partners and ended the joint venture in 1994. In 1993,The Coca-Cola Company returned in pursuance of India's Liberalization policy. In 2005, TheCoca-Cola Company and PepsiCo together held 95% market share of soft-drink sales inIndia. Coca-Cola India's market share was 52.5%.

In Russia, Pepsi initially had a larger market share than Coke but it was undercut once theCold War ended. In 1972, Pepsi Co Company struck a barter agreement with the governmentof the Soviet Union, in which Pepsi Co was granted exportation and Western marketingrights to Stolichnaya vodka in exchange for importation and Soviet marketing of Pepsi-Cola.

This exchange led to Pepsi-Cola being the first foreign product sanctioned for sale in the

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U.S.S.R. Pepsi, as one of the first American products in the Soviet Union, became a symbolof that relationship and the Soviet policy.

Brand name loyalty is another competitive pressure. The Brand Keys Customer LoyaltyLeaders Survey (2004) shows the brands with the greatest customer loyalty in all industries.Diet Pepsi ranked 17th and Diet Coke ranked 36th as having the most loyal customers to theirbrands. The new competition between rival sellers is to create new varieties of soft drinks,such as vanilla and cherry, in order to increase sales and getting new customers.

Pepsi is however trying to counter this by competing more aggressively in the emergingeconomies where the dominance of Coke is not as pronounced, with the growth in emergingmarkets significantly expected to exceed the developed markets, rivalry in internationalmarket is going to be more pronounced.Pepsi advertisements often focused on celebrities, choosing Pepsi over Coke, supportingPepsi's positioning as "The Choice of a New Generation." In 1975, Pepsi began showingpeople doing blind taste tests called Pepsi Challenge in which they preferred one product overthe other. Pepsi started hiring more popular spokespersons to promote their products.In the late 1990s, Pepsi launched its most successful long-term strategy of the Cola Wars,Pepsi Stuff. Consumers were invited to "Drink Pepsi, Get Stuff" and collect Pepsi Points onbillions of packages and cups. They could redeem the points for free Pepsi lifestylemerchandise. After researching and testing the program for over two years to ensure that itresonated with consumers, Pepsi launched Pepsi Stuff, which was an instant success.Tens of millions consumers participated. Pepsi outperformed Coke during the summer of theAtlanta Olympics, held at Coke's hometown where Coke was the lead sponsor for the Games.Due to its success, the program was expanded to include Mountain Dew into Pepsi'sinternational markets worldwide. The company continued to run the program for many years,continually innovating with new features each year.

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Coca-Cola and Pepsi engaged in a "cyber-war" with the re-introduction of Pepsi Stuff in 2005& Coca-Cola retaliated with Coke Rewards. This cola war has now concluded, with PepsiStuff ending its services and Coke Rewards still offering prizes on their website. Both wereloyalty programs that give away prizes and product to consumers after collecting bottle capsand 12 or 24 pack box tops, then submitting codes online for a certain number of points.However, Pepsi's online partnership with Amazon allowed consumers to buy variousproducts with their "Pepsi Points", such as mp3 downloads. Both Coca-Cola and cokepreviously had a partnership with the iTunes Store.

POTENTIAL ENTRANTS:

New entrants are not a strong competitive pressure for the soft drink industry. Coca-Cola andPepsi Co dominate the industry with their strong brand name and great distribution channels.In addition, the soft-drink industry is fully saturated and growth is small. This makes it verydifficult for new, unknown entrants to start competing against the existing firms.

Another barrier to entry is the high fixed costs for warehouses, trucks, and labour, andeconomies of scale. New entrants cannot compete in price without economies of scale. Thesehigh capital requirements and market saturation make it extremely difficult for companies toenter the soft drink industry therefore new entrants are not a strong competitive force.Capital requirements for producing, promoting, and establishing a new soft drinktraditionally have been viewed as extremely high. According to industry experts, this makesthe likelihood of potential entry by new players quite low, except perhaps in much localizedsituations that matter little to Coke or Pepsi. Yet, while this view may reflect conventionalwisdom, some industry observers question whether a new time is coming, with 'new age'beverages selling to well-informed and health- informed and health-conscious consumers.This issue was beginning to grab the attention of both Coke and Pepsi in the summer of1992, when they both were not able to explain a drop in their June 1992 sales.

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SUBSTITUTES:

Numerous beverages are available as substitutes for soft drinks. Citrus beverages and fruitjuices are the more popular substitutes. Availability of shelf space in retail stores as well asadvertising and promotion traditionally has had a significant effect on beverage purchasingbehaviour. Overall total liquid consumption in the United States in 1991 included Coca-Cola's 10% share of all liquid consumption.

“For years the story in the non-alcoholic sector centred on the power struggle between Cokeand Pepsi. But as the pop fight has topped out, the industry's giants have begun relying onnew product flavours and looking to noncarbonated beverages for growth.”

Substitute products are those competitors that are not in the soft drink industry. Suchsubstitutes for Coca-Cola products are bottled water, sports drinks, coffee, and tea, juices etc.Bottled water and sports drinks are increasingly popular with the trend to be a more healthconscious consumer. There are progressively more varieties in the water and sports drinksthat appeal to different consumer's tastes, but also appear healthier than soft drinks.

In addition, coffee and tea are competitive substitutes because they provide caffeine. Theconsumers who purchase a lot of soft drinks may substitute coffee if they want to keep thecaffeine and lose the sugar and carbonation.

Blended coffees are also becoming popular with the increasing number of Starbucks, Baristaand CCD stores that offer many different flavours to appeal to all consumer markets. It is alsocheap for consumers to switch to these substitutes making the threat of substitute productsvery strong (Datamonitor, 2005).

The growth rate has been recently criticized due to the market saturation of soft drinks.Datamonitor (2005) stated, “Looking ahead, despite solid growth in consumption, the global

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soft drinks market is expected to slightly decelerate, reflecting stagnation of market prices.”The change attributed to the other growing sectors of the non-alcoholic industry including tea& coffee is 11.8% and bottled water is 9.3%. Sports drinks and energy drinks are alsoexpected to increase in growth as competitors start adopting new product lines.

Profitability in the soft drink industry will remain rather solid, but market saturation hascaused analysts to suspect a slight deceleration of growth in the industry (2005). Because ofthis, soft drink leaders are establishing themselves in alternative markets such as the snack,confections, bottled water, and sports drinks industries.

In order for soft drink companies to continue to grow and increase profits they will need todiversify their product offerings. So in order to compete with the substitutes industry, coca-cola has diversified from just carbonated drink industry to other substitute and so have otherbrands like Pepsi, Dr pepper/Snapple.

BARGANING POWER OF BUYERS

:

Individual consumers are the ultimate buyers of soft drinks. However, Coke and Pepsi's real'buyers' have been local bottlers who are franchised -or are owned, especially in the case ofCoke- to bottle the companies' products and to whom each company sells its patented syrupsor concentrates. While Coke and Pepsi issue their franchise, these bottlers are in effect the'conduit' through which these international cola brands get to local consumersThrough the early 1980's, Coke's domestic bottlers were typically independent familybusinesses deriving from franchises issued early in the century. Pepsi had a collection ofsimilar franchises, plus a few large franchisees that owned many locations. Until 1980, Cokeand Pepsi were somewhat restricted in owning bottling facilities, which was viewed as arestraint of free trade. Jimmy C arter, a Coke fan, changed that by signing legislation to allowsoft-drink companies to own bottling companies or territories, plus upholding the territorialintegrity of soft-drink franchises, shortly before he left office.

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Also, the three most important channels for soft drinks are supermarkets, fountain sales, andvending. In 1987, supermarkets accounted for about 40% of total U.S. soft drink industrysales, fountain sales represented about 25%, and vending accounted for approximately 13%.Other retailers represent the remaining percentage.While both Coca-Cola and Pepsi distribute their bottled soft drinks through a network ofbottling companies, Coca-Cola uses its own network of wholesalers for their fountain syrupdistribution, and Pepsi distributes its fountain syrup through its bottlers.

BARGANING POWERSUPPLIERS: The principal raw material used by the soft-drink industry in the United States is

highfructose corn syrup, a form of sugar, which is available from numerous domestic sources.The principal raw material used by the soft-drink industry outside the United States issucrose. It likewise is available from numerous sources.Another raw material increasingly used by the soft-drink industry is aspartame, a sweeteningagent used in low-calorie soft-drink products. Until January 1993, aspartame was availablefrom just one source -the NutraSweet Company, a subsidiary of the Monsanto Company- inthe United States due to its patent, which expired at the end of 1992.Coke managers have long held 'power' over sugar suppliers. They view the recently expiredaspartame patents as only enhancing their power relative to suppliers.

PESTEL ANALYSIS OF COCA- COLA

PESTLE stands for Political,

Economic, Social,

Technological,

Legal and Environmental. Itis a tool that helps the organisations for making strategies and to know the

EXTERNALenvironment in which the organisation is working and is going to work in the future.Coca-Cola beverage, which is the leading manufacturer and distributor of non-alcoholicdrinks also need to undergo this PESTLE analysis to know about the external environment(especially their competitors and the opportunities available) in order to keep pace with the

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fast growing economy.Political Analysis:Political factors are how far a government intervenes in the operations of the company. Thepolitical factors may include tax policy, trade restrictions, environmental policy, lawsimposed on the recruiting labours, amount of permitted goods by the government and theservice provided by the government.Globally, Coca-Cola beverages being a non-alcoholic industry falls under the FDA (Food andDrug Administration), it is an agency in the United States Department of Health and HumanServices. Its headquarters is in USA and it has started opening offices in foreign countries aswell. The job of the FDA is to check and certify whether the ingredients used in themanufacturing of Coca-Cola products in the particular country is meeting to the standards ornot. In Coca-Cola the company takes all the necessary steps to analyze thoroughly beforeintroducing any ingredients in its products and get prior approval from the FDA. Thecompany also has to take into consideration of the regulation imposed by FDA on plasticbottled products.Apart from FDA the other political factors includes tax policies and accounting standards.The accounting standards used by the company changes from time to time which have asignificant role in the reported results.The company also is subjected to income tax policies according to the jurisdiction of variouscountries. In addition to this, the company is also subjected to import and excise duties fordistribution of the products in the countries where it does not have the outsourcing units.Moreover, if there is any unrest or changes in the government and any kind of protest by thepolitical activists may decline the demand for the products. Also the situations like the unsureconditions prevailing in Iraq and escalation of the terrorist activities in these areas couldaffect the international market of our product. It creates an inability for the company to

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penetrate in the markets of such countries.Economic Factors:

The economic factors analyze the potential areas where the firm can grow and expand. Itincludes the economic growth of the country, interest rates, exchange rates, inflation rates,wage rates and unemployment in the country.The company first analyzes the economic condition of the country before venturing into thatcountry. When there is an economic growth in the country, the purchasing power amongpeople increases. It gives the company or the marketer a good chance to market the product.Coca-Cola, in the past identified this correctly and rightly started its distribution acrossvarious countries. The net operating profits for the company outside US stands at around72%. Along with this the company uses 63 various types of currencies other than US Dollar.Hence there is a definite impact in the revenues due to the fluctuating foreign currencyexchange rates. A strong and weak currency tends to affect the exporting of the productsglobally.

Interest rates are the rate which is imposed on the company for the money they haveborrowed from government. When there is an increase in the interest rates, it may deter thecompany in further investment as the cost for borrowing is higher. Coca-Cola uses derivativefinancial instruments to cope up with the fluctuating interest rates. Inflation and wage rate gohand in hand, when there is an increase in the inflation the employee demand for a higherwage rate to cope up with the cost of living.This comes as additional cost for the company which cannot be reflected in the price of thefinal product as the competition and risk in this segment is higher. This is a threat in theexternal environment faced by the company. From the above explanation it is clearly seenthat the economic factors involves a major impact in the behaviour of the company duringvarious economic situations.

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Social Factors:

Social factors are mainly the culture aspects and attitude, health consciousness among people,population growth with age distribution, emphasis on safety. The company cannot change thesocial factors but the company has to adjust itself to the changing society. The companyadapts various management strategies to adapt to these social trends.Coca-Cola which is a B2C company, is directly related to the customer, so social changes arethe most important factors to consider. Each and every country has a unique culture andattitude among the people. It is very important to know about the culture before marketing ina particular country. Coca-Cola has about 3300+ products in their stable, when entering into acountry it does not introduce all the products. It introduces minimum number of productsaccording to the culture of the country and the attitude of the people.Consumers and government are becoming increasingly aware of the public healthconsequences, mainly obesity which is the second social factor in the soft drinks industry. Itinspired the company to venture into the areas of Diet coke and zero calorie soft drinks. Theproblem of obesity is taken seriously among the youngsters who like to maintain a goodphysique. Hence coke introduced dietary products for those youngsters who can enjoy cokewith zero calories. In one of the study it is said that “Consumer from the age groups 37 to 55are also increasingly concerned with nutrition”. Since many are aware, they are concernedwith the longevity of their lives. This will affect the demand of the company in the existingproduct and also is an opportunity to venture into new health and energy drinks industry.Population growth rate and the age distribution is another social factor to be considered. It isvery important because non-alcoholic markets have most of its share from the children andyoungsters. Adults used to celebrate mostly with alcohol. The age distribution of the countrybecomes important for the success of the product in a country.

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Technological Factors:Technology plays a varied role in the soft drinks industry. The manufacturing and distributionof the products is relatively a Low-Tech business, although the creation of a new productwith the perfect blend and taste is a science (an art in itself).Technological contributions are most important in packaging. The company rely on theirbottling partners for a significant portion of their business. Nearly 83% of the worldwide unitcase volume is manufactured and distributed by their bottling partners in whom the companydoes not have controlling power. Hence it is necessary for the company to maintain a cordialrelation with their bottling partners. If the company do not give ample support in pricing,marketing and advertising then the bottling industry while increase their short term profits,may become detrimental to the company.The advancement in technology in the company has led to: Introduction of new ways for theavailability of Coca-Cola, it introduced general vending machines all over the world. Inproducts it led to the development of new products like Cherry Coke, Diet Coke etc. Thetechnical advancement in the bottling industries include, introduction of recyclable and nonrefillable bottles, introduction of cans which are trendy, stylish and popular among theyoungsters.

Legal Factors

The legal factors include discrimination law, customer law, antitrust law, employment lawand health and safety law. In Coca-Cola the business is subjected to various laws andregulation in the numerous countries in which they do the business, the laws includecompetition, product safety, advertising and labelling, container deposits, environmentprotection, labour practices.In the US the products of the company is subjected to various acts like Federal Food, Drugand Cosmetic Act, the Federal Trade Commission Act, Occupation Safety and Health Act,

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various environment related acts and regulations, the production, distribution, sale andadvertising of all the products are subjected to various laws and regulations. Changes in theselaws could result in increased costs and capital expenditures, which affects the companyprofitability and also the production and distribution of the products.Various jurisdictions may adopt significant regulations in the additional product labelling andwarning of certain chemical content or perceived health consequences. These requirements ifbecome applicable in the future the company must be ready to accept and have necessarychanges in hand for the same.Environment FactorsThese factors include the environment such as the weather conditions and the seasons inwhich people prefer to buy cool beverages. Also the company must follow the environmentalissues related to the product manufacturing, packaging and distributing in various countries.It must adhere to the norms and market the product accordingly. Usage of renewable plasticin the PET bottles is followed by the company strictly.

SWOT ANALYSIS OF COCA-COLA

Fig 2.1 SWOT ANALYSIS OF COCA-COLA

STRENGTHES:

WORLD’S LEADING BRAND

Coca-Cola has strong brand recognition across the globe. The company has a leading brandvalue and a strong brand portfolio. Business-Week and Inter-brand, a branding consultancy,recognize. Coca-Cola as one of the leading brands in their top 100 global brands ranking in2006.The Business Week-Inter-brand valued Coca-Cola at $67,000 million in 2006. Coca-

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Cola ranks well ahead of its close competitor Pepsi which has a ranking of 22 having a brandvalue of $12,690 million Furthermore; Coca-Cola owns a large portfolio of product brands.The company owns four of the top five soft drink brands in the world: Coca-Cola, Diet Coke,Sprite and Fanta.Strong brands allow the company to introduce brand extensions such as Vanilla Coke, CherryCoke and Coke with Lemon. Over the years, the company has made large investments inbrand promotions. Consequently, Coca-cola is one of the best recognized global brands. Thecompany’s strong brand value facilitates customer recall and allows Coca-Cola to penetratenew markets and consolidate existing ones.

LARGE SCALE OF OPERATIONS

With revenues in excess of $24 billion Coca-Cola has a large scale of operation. Coca- Cola isthe largest manufacturer, distributor and marketer of non-alcoholic beverage concentrates andsyrups in the world. Coco-Cola is selling trademarked beverage products since the year 1886in the US. The company currently sells its products in more than 200 countries. Of theapproximately 52 billion beverage servings of all types consumed worldwide every day,beverages bearing trademarks owned by or licensed to Coca-Cola account for more than 1.4billion.

The company’s operations are supported by a strong infrastructure across the world. Coca-Cola owns and operates 32 principal beverage concentrates and/or syrup manufacturingplants located throughout the world.In addition, it owns or has interest in 37 operations with 95 principal beverage bottling andcanning plants located outside the US. The company also owns bottled water production andstill beverage facilities as well as a facility that manufactures juice concentrates. Thecompany’s large scale of operation allows it to feed upcoming markets with relative ease andenhances its revenue generation capacity.

ROBUST REVENUE GROWTH IN 3 SEGMENTS

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Coca-Cola’s revenues recorded a double digit growth, in three operating segments. Thesethree segments are Latin America, ‘East, South Asia, and Pacific Rim’ and Bottlinginvestments. Revenues from Latin America grew by 20.4% during fiscal 2006, over 2005.During the same period, revenues from ‘East, South Asia, and Pacific Rim’ grew by 10.6%while revenues from the bottling investments segment by 19.9%.Together, the three segments of “Latin America”, “East, South Asia” and “Pacific Rim”bottling investments, accounted for 34.8% of total revenues during fiscal 2006. Robustrevenues growth rates in these segments contributed to top-line growth for Coca-Cola during2006.

WEAKNESS:

NEGATIVE PUBLICITY

The Coca-Cola Company has been involved in a number of controversies and lawsuits relatedto its relationship with human rights violations and other perceived unethical practices. Therehave been continuing criticisms regarding the Coca-Cola Company's relation to the MiddleEast and U.S. foreign policy. The company received negative publicity in India duringSeptember 2006.The company was accused by the Centre for Science and Environment(CSE) of selling products containing pesticide residues. Coca-Cola products sold in andaround the Indian national capital region contained a hazardous pesticide residue.

On 10 December 2008, the US Food and Drug Administration (FDA) wrote to Mr. MuhtarKent, President and Chief Executive Officer, to warn him that the FDA had concluded thatCoca-Cola's product Diet Coke Plus 20 FL OZ was is in violation of the Federal Food, Drug,and Cosmetic Act.In January 2009, the US consumer group the Centre for Science in the Public Interest filed aclass-action lawsuit against Coca-Cola. The lawsuit was in regards to claims made, along

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with the company's flavours, of Vitamin Water. Claims say that the 33 grams of sugar aremore harmful than the vitamins and other additives are helpful.

SLUGGISH PERFORMANCE IN NORTH AMERICA

Coca-Cola’s performance in North America was far from robust. North America is Coca-Cola’s core market generating about 30% of total revenues during fiscal 2006. Therefore, astrong performance in North America is important for the company.I

n North America the sale of unit cases did not record any growth. Unit case retail volume inNorth America decreased 1% primarily due to weak sparkling beverage trends in the secondhalf of 2006 and decline in the warehouse-delivered water and juice businesses. Moreover,the company also expects performance in North America to be weak during 2007. Sluggishperformance in North America could impact the company’s future growth prospects andprevent Coca-Cola from recording a more robust top-line growth.

DECLINE INCASH FROM OPERATING ACTIVITIES

The company’s cash flow from operating activities declined during fiscal 2006. Cash flowsfrom operating activities decreased 7% in 2006 compared to 2005. Net cash provided byoperating activities reached $5,957 million in 2006, from $6,423 million in 2005. Coca-Cola’s cash flows from operating activities in 2006 also decreased compared with 2005 as aresult of a contribution of approximately $216 million to a tax-qualified trust to fund retireemedical benefits.

The decrease was also the result of certain marketing accruals recorded in 2005.Decline incash from operating activities reduces availability of funds for the company’s investing andfinancing activities, which, in turn, increases the company’s exposure to debt markets andfluctuating interest rates.

OPPORTUNITIES:

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ACQUISITIONS

During 2006, its acquisitions included Kerry Beverages, (KBL), which was subsequently,reappointed Coca-Cola China Industries (CCCIL). Coca-Cola acquired a controllingshareholding in KBL, its bottling joint venture with the Kerry Group, in Hong Kong.The acquisition extended Coca-Cola’s control over manufacturing and distribution jointventures in nine Chinese provinces.In Germany the company acquired Apollinaris which sells sparkling and still mineral water.Coca-Cola has also acquired a 100% interest in TJC Holdings, a bottling company in SouthAfrica. Coca-Cola also made acquisitions in Australia and New Zealand during 2006. Theseacquisitions strengthened Coca-Cola’s international operations.These also give Coca- Cola an opportunity for growth, through new product launch or greaterpenetration of existing markets. Stronger international operations increase the company’scapacity to penetrate international markets and also gives it an opportunity to diversity itsrevenue stream.

On 25 February 2010, Coco cola confirms to acquire the Coca colaenterprises (CCE) one the biggest bottler in North America. This strategy of coca

colastrengthens its operations internationally.

GROWING BOTTLED WATER MARKET

Bottled water is one of the fastest-growing segments in the world’s food and beverage marketowing to increasing health concerns. The market for bottled water in the US generatedrevenues of about $15.6 billion in 2006.

Market consumption volumes were estimated to be 30 billion litres in 2006. The market'sconsumption volume is expected to rise to 38.6 billion units by the end of 2010. Thisrepresents a CAGR of 6.9% during 2005-2010.

In terms of value, the bottled water market is forecast to reach $19.3 billion by the end of2010. In the bottled water market, the revenue of flavoured water (water-based, slightlysweetened refreshment drink) segment is growing by about $10 billion annually. The

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company’s Dasani brand water is the third best-selling bottled water in the US. Coca-Colacould leverage its strong position in the bottled water segment to take advantage of growingdemand for flavoured water.

GROWING HISPANIC POPULATION IN U.S

Hispanics are growing rapidly both in number and economic power. As a result, they havebecome more important to marketers than ever before. In 2006, about 11.6 million UShouseholds were estimated to be Hispanic. This translates into a Hispanic population of about42 million.

The US Census estimates that by 2020, the Hispanic population will reach 60 million oralmost 18% of the total US population. The economic influence of Hispanics is growing evenfaster than their population. Nielsen Media Research estimates that the buying power ofHispanics will exceed $1 trillion by 2008- a 55% increase over 2003 levels.Coca-Cola has extensive operations and an extensive product portfolio in the US. Thecompany can benefit from an expanding Hispanic population in the US, which wouldtranslate into higher consumption of Coca-Cola products and higher revenues for thecompany.

THREATS:

INTENSE COMPETITION

Coca-Cola competes in the non-alcoholic beverages segment of the commercial beveragesindustry. The company faces intense competition in various markets from regional as well asglobal players. Also, the company faces competition from various non-alcoholic sparklingbeverages including juices and nectars and fruit drinks. In many of the countries in whichCoca-Cola operates, including the US, PepsiCo is one of the company’s primary competitors.Other significant competitors include Nestle, Cadbury Schweppes, Groupe DANONE andKraft Foods.

Competitive factors impacting the company’s business include pricing, advertising, sales

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promotion programs, product innovation, and brand and trademark development andprotection. Intense competition could impact Coca-Cola’s market share and revenue growthrates.

DEPENDENCE ON BOTTLING PARTNERS

Coca-Cola generates most of its revenues by selling concentrates and syrups to bottlers inwhom it doesn’t have any ownership interest or in which it has no controlling ownershipinterest. In 2006, approximately 83% of its worldwide unit case volumes were produced anddistributed by bottling partners in which the company did not have any controlling interests.As independent companies, its bottling partners, some of whom are publicly tradedcompanies, make their own business decisions that may not always be in line with thecompany’s interests. In addition, many of its bottling partners have the right to manufactureor distribute their own products or certain products of other beverage companies.If Coca-Cola is unable to provide an appropriate mix of incentives to its bottling partners,then the partners may take actions that, while maximizing their own short-term profits, maybe detrimental to Coca-Cola. These bottlers may devote more resources to businessopportunities or products other than those beneficial for Coca-Cola. Such actions could, inthe long run, have an adverse effect on Coca-Cola’s profitability.In addition, loss of one or more of its major customers by any one of its major bottlingpartners could indirectly affect Coca-Cola’s business results. Such dependence on thirdparties is a weak link in Coca-Cola’s operations and increases the company’s business risks.

SLIGGISHGROWTH OF CARBONATED BEVERAGES

US consumers have started to look for greater variety in their drinks and are becomingincreasingly health conscious. This has led to a decrease in the consumption of carbonatedand other sweetened beverages in the US. The US carbonated soft drinks market generatedtotal revenues of $63.9 billion in 2005, this representing a compound annual growth rate(CAGR) of only 0.2% for the five-year period spanning 2001-2005. The performance of the

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market is forecast to decelerate, with an anticipated compound annual rate of change (CAGR)of -0.3% for the five-year period 2005-2010 expected to drive the market to a value of $62.9billion by the end of 2010.

Moreover in the recent years, beverage companies such as Coca-Cola have been criticized forselling carbonated beverages with high amounts of sugar and unacceptable levels ofdangerous chemical content, and have been implicated for facilitating poor diet andincreasing childhood obesity. Moreover, the US is the company’s core market. Coca-Colaalready expects its performance in the region to be sluggish during 2007. Coca-Cola’srevenues could be adversely affected by a slowdown in the US carbonated beverage market.

Coca-Cola India was the leading soft drink brand in India till 1977 when it was forced to

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close down its operation by a socialist government in the drive for self sufficiency. After 16years of absence, coca cola returned to India and witnessed a different culture and economicplatform. During their absence, Parle brothers introduced a new type of cola called THUMSUP. Along with, they also formulated a lemon flavoured drink, LIMCA, and mangoflavoured, MAAZA. In 1993, coca cola bought the whole Parle Brother operation, in a hopeto beat the main competitor (Pepsi). They presumed that with the tried and tested products ofParle they will be able to regain their throne in the Indian soft drink market. Pepsi having a 6year head start helped revive the demand for global cola but it was not easy for the soft drinkgiant (coca cola) to return to India. Pepsi put more focus on the youth of the country in theiradvertisements but coca cola tried influencing Indians with the ‘American’ way of life, whichturned out to be a mistake.Coca-Cola invested heavily in India for the first five years, which got them credit of beingone of the biggest investor in the country; however, their sales figures were not soimpressive. Hence, they had to re-think their market strategies. Coca-Cola learned fromHindustan Lever that reducing their will result in more turnover, hence leading to profit. Theylaunched an extensive market research in India. They ascertained that in India 3 As must beapplied; Affordability, Availability and Acceptability. Coca- Cola learnt that they werecompeting with local drinks such as “Nimbu Pani”, “Narial Pani”, “Lassi” etc. and reached toa conclusion that competitive pricing was unavoidable. Since then they introduced a 200 mlglass bottle for Rs.5.

Further, they had different advertising campaigns for different regions of the country. In thesouthern part, their strategy was to make Bollywood or Tamil stars to endorse their products.In various regions they tried portraying coca cola products with different regional foodproducts. One of the most famous ad campaigns in India was ‘Thanda Matlab Coca- Cola’;they featured the same quote with different regional entities.Presently, Coca-Cola is the biggest brand in soft drinks and is way ahead in market share i.e.

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60% in Carbonated Soft drinks Segment, 36% in Fruit drinks Segment, 33% in Packagedwater Segment, compared to its arch rival, Pepsi. Diversifying their product range and havinga competitive pricing policy, they have regained their throne.

With virtually all the goods andservices required to produce and market Coca-Cola being made in India, the business

systemof the Company directly employs approximately 6,000 people, and indirectly createsemployment for more than 125,000 people in related industries through its vast procurement,supply, and distribution System.The Indian operations comprises of 50 bottling operations, 25 owned by the Company, withanother 25 being owned by franchisees. That apart, a network of 21 contract packersmanufactures a range of products for the Company.On the distribution front, 10-tonne trucks – open bay three-wheelers that can navigate thenarrow alleyways of Indian cities – constantly keep our brands available in every nook andcorner of the Country’s remotest areas.

PRODUCTS OF COCA-COLA INDIA

COCA-COLA:-

In India Coca-Cola was leading soft drink till 1977 when Government policies necessitatedits departure. Coca-Cola made its return to the country in 1993 and made significantinvestments to ensure that the beverage is available to more and more people, even in remoteand inaccessible parts of the nation.Over the past fourteen years has enthralled consumers in India by connecting with passions ofIndia – Cricket, movies, music & food. Coca-Cola’s advertising campaigns

“Jo Chaho HoJaye” & “Life Ho Toh

Aise”were very popular & had entered youths vocabulary. In2002.Coca-Cola launched its iconic

campaign“Thanda Matlab Coca-Cola” which sky

rocketed the brand to make it India’s favourite soft drink brand.

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GLASS PET CAN FOUNTAIN

200ml, 300ml, 500ml, 1.5L, 2L, 330 ml VARIOUS SIZES

500ml, 1000ml 2.25L, 500ml, 100ml

Table - 1.0

LIMCA:-

Limca was introduced in 1971 in India. Limca has remained unchallenged as the No.1sparkling drink in the cloudy lemon segment. The success formula is the sharp fizz andlemoni bite combined with the single minded proposition of the brand as the provider of“Freshness”.Limca can cast a tangy refreshing spell on anyone, anywhere. Derived from “Nimbu” +“Jaise” hence Lime Sa, Limca has lived up to its promises of refreshment and has been theoriginal thirst choice of millions of customers for over 3 decades.



500ml, 1000ml 2.25L, 500ml, 100ml

Table - 1.1

THUMS UP:-

Thums up is a leading sparkling soft drink and most trusted brand in India. Originallyintroduced in 1977, Thums up was acquires by The Coca-Cola Company in 1993. Thums up

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is known for its strong, fizzy taste and it confident, mature and uniquely masculine attitude.This brand clearly seeks to separate the men from the boys.



500ml, 1000ml 2.25L, 500ml, 100ml

Table - 1.2

SPRITE:-

Sprite a global leader in the lemon lime category is the second largest sparkling beveragebrand in India. Launched in 1999, Sprite with its cut-thru perspective has managed to be atrue teen icon.

RGB PET CAN FOUNTAIN

200ml, 300ml 500ml, 600ml, 330 ml VARIOUS SIZES

1250ml, 1500ml,

2000ml, 2250ml

Table – 1.3

FANTA:-

Fanta entered the Indian market in the year 1993. Over the years Fanta has occupied a strong

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market place and is identifies as “The Fun Catalyst”. Perceived as a fun youth brand, Fantastands for its vibrant colour, tempting taste and tingling bubbles that not just uplifts feelingsbut also helps free spirit thus encouraging one to indulge in the moment. This positiveimagery is associated with happy, cheerful and special times with friends.


200ml, 300ml 500ml, 1.5L, 2L, 330 ml VARIOUS SIZES

2.25L, 500ml, 100ml

Table – 1.4

MINUTE MAID PULPY ORANGE:-

The history of the Minute Maid brand goes as far back as 1945 when the Florida FoodCorporation developed orange juice powder. The company developed a process thateliminated 80% of the water in the orange juice, forming a frozen concentrate that whenreconstitute created orange juice. They branded it Minute Maid a name connoting theconvenience and the ease of preparation. Minute Maid thus moved from a powderedconcentrate to the first ever orange juice from concentrate.The launch of Minute Maid in India (started with the south of the country) is aimed to furtherextend the leadership of Coca-Cola in India in the juice drink category.Available in 3 PET pack sizes i.e. 400ml, 1 litre, 1.25 litres.

MAAZA:-

Maaza was introduced in late 1970’s. Maaza has today come to symbolise the very spirit of

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mangoes. Universally loved for its taste, colour, thickness and wholesome properties, Maazais the mango lover’s first choice.

RGB PET POCKET MAAZA

200ml, 250ml 250ml, 600ml, 1.2L 200ml

Table – 1.5

KINLEY:-

The importance of water can never be understated, Particularly in a nation such as Indiawhere water governs the lives of the millions, be it as a part of everyday ritual or as themonsoon which gives life to the sub continent. Kinley water comes with the assurance ofsafety from the Coca-Cola Company.Available in PET 500ml and 1000ml.

GEORGIA GOLD COFFEE:-

Georgia coffee was introduced in India in 2004. The Georgia gold range of Tea and coffeebeverages is the perfect solution for office and restaurant needs. Today Georgia coffee isavailable at Quick-Service Restaurants, Airports, Cinemas and in Corporates across all majormetros in India.HOT BEVERAGES Espresso, Americano, Cappuccino, Caffe Latte, Mochaccino, Hot Chocolate, Cardamon

Tea.COLD BEVERAGES Ice Teas, Cold Coffee.

Table – 1.6

MARKETING MIX OF COCA-COLA INDIA

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PRODUCT:-

Coca-Cola India has a wide range of products in its product line i.e. Coca-Cola, Fanta, Sprite,Thums Up, Maaza, Minute Maid and Georgia Gold. Bottled water was another area whereCoca-Cola identified major opportunities. In 2002, Packaged drinking water in India was aRs 1,000 cr industry and growing by 40% every year. PDW was a low margin – high volumebusiness, but it was an attractive proposition for bottlers as it increased plant utilization rates.In this market Coke’s Kinley was pitched against Ramesh Chauhan’s Bisleri and Pepsi’sAquafina. The product not only faced intense competition but also was difficult todifferentiate. Coke positioned Kinley as natural water with the tag line

“Bhoond Bhoond

Mein Vishwas”

(Trust in each drop of water).

In early 1999, the parent company acquired Cadbury Schweppes. As a result 12 more bottlerswere brought into CCI’s fold. This acquisition added Crush, Canada Dry and Sport Cola toCCI’s product line. This meant CCI had three orange, clear lime and cola drinks each in itsportfolio.

PRICE:-

Coke learnt with experience that price was a strategic weapon in an emerging market likeIndia. An increase in value added tax in 1996 had taken the price of the 300ml bottle beyondthe reach of many Indian customers. In 2000, CCI conducted a yearlong experiment incoastal Andhra Pradesh by introducing a 200ml bottle at Rs 7. The volumes went up by 30%demonstrating the importance of consumer affordability. So the 200ml pack priced at Rs 5was rolled out countrywide in January 2003. The advertising Campaign highlighted theaffordability and Indian image.To make it affordable, Coke introduced Kinley in 200ml pouches for Re. 1 in selected placesin Ahmadabad and 200ml water cups in Maharashtra, priced at Rs 3 per cup in testingmarketing exercise conducted in mid – 2002. In 2002 Kinley with 35% market share hadbecome the leader in the retail PDW segment and was contributing 20% of CCI’s revenues.

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PLACE:-

Coke pushed down responsibilities from corporate headquarters to the local business units.The aim was to effectively align CCI's corporate resources, support systems and culture toleverage the local capabilities. CCI's operations had been divided into North, Central andSouthern regions. Each region had a president at the top, with divisions comprisingmarketing, finance, human resources and bottling operations. The heads of the divisionsreported to the CEO. Bottling operations were divided into four companies directed by thebottling head from headquarters. Under the new plan, CCI shifted to a six region profit centerset up where product customization and packaging, marketing and brand building were takenup locally. A Regional General Manager (RGM) headed each region with the regionalfunctional heads reporting to him. All the RGMs reported to VP (Operations, who in turnreported to CEO. The four bo

Documents

PROJECT REPORT ON COCA-COLA COMPANYdocshare04.docshare.tips/files/5726/57265700.pdf“Project Report on Coca-Cola Company and study of customerpreference for Coca-Cola brands with