The Coca-Cola Company is the world’s leading beverage company. With a brand value of 78.5 billion dollars, Coca-cola is the world’s number one brand according to Interbrand. Based in Atlanta, Georgia, the company distributes carbonated soft drinks, light and diet beverages, waters, juices and juice drinks, teas, coffees, energy and sports drinks in over 200 countries.
Even though Coco-Cola’s beverage portfolio caters primarily to Carbonated Soft Drinks, the company has been expanding fast into the non-carbonated soft drinks category in response to a shift in consumer demand and a greater emphasis on healthy options. The Company generated net annual operating revenue of 28.9 billion USD in 2007, representing a 20% growth over the previous year.Even though Coca-cola is the leading brand with large scale operations across the world, the company has been facing sluggish sales in the carbonated drinks market in North America. The main threats that face Coca-Cola are the rise in the number of substitutes as well as the growing health consciousness of the consumers. With key acquisitions of many non-carbonated drinks and the opportunity presented by the growing bottled water market, Coca-Cola is in a favorable position to meet its threats.
Company PrioritiesBased on its annual report, Coca-cola has outlined 5 priorities that it will focus on in the year 2008 and that is to grow its leadership in the sparkling beverage industry, rapidly grow its still beverages, leverage a balanced geographic portfolio, accelerate innovation pipeline and strengthen coca-cola’s system capabilities.These priorities show the increased commitment of the Coca-Cola Company to further grow in the market and continuously establish itself as the world leader in the beverage industry.Coca-Cola is number 1 in sparking beverages, juices and juice drinks, and in ready to drink coffee and teas. It is number 2 in sports drinks and number 3 in packaged water.
Strategy Canvas of Coca-ColaThe factors of competition for the industry are listed on the horizontal axis and the vertical axis indicates the degree to which Coca-Cola and its key competitor, PepsiCo invests in the competitive factors.This canvas is based on the Competitive Matrix Profile (see appendix ) which identifies the key success factors in the industry Coca-cola operates in, namely the beverage industry. Accordingly the factors of diversification of product, innovation, distribution channels, Brand, Packaging, Geographic Spread and Advertising have been identified as the competitive factors that determine success in this industry.Based on the careful analysis it would be well advised that the Coca-cola Company focus on the strategies outlined below.
Growth in Emerging EconomiesThere has been an increased shift from the rural to the urban areas in emerging economies. This shift translates into a growing base of middle income consumers. This growth is accompanied by the increase in demand for carbonated soft drinks which in turn mitigates the effects of the decline in the US Markets in terms of volume of sparkling beverages.Coca-cola should focus its marketing efforts for sparkling beverages on mainly the BRIC market and other key emerging markets. Together with increasing the number of bottling partners, it should work towards developing stronger relations with its existing partners so as to take advantage of their knowledge of the local markets. This knowledge should in turn be translated into effective local strategies that target and captivate the consumers.
Diversify Product Offerings in the Non-Carbonated SectorDriven by increasing health concerns, consumers are rapidly shifting their focus from carbonated drinks to non-carbonated drinks. Evidence of this is seen through the decline in the share of carbonated drinks in the US and European markets. Thus, it is vital that Coca-cola increase its product offerings in the Non- CSD market.The global juice market has seen a constant rise and is expected to continue growing in the years to come. With a leading share of 12.6 % ( Source Datamonitor 2007) in the juices market Coca-cola needs to expand its market of its products Minute Maid and Jugos del Valle into more countries.
Coca-cola is also the leading brand in the ready to drink tea and coffee market. With double digit volume growth and through partnerships such as that with Caribou Coffee in North America, Coca-cola can look towards increasing its presence in this market. In terms of energy drinks, Coca-cola is 2nd. However with adequate acquisitions and good market penetration plans, Coca-cola should be able to gain a strong foothold.
Increase Market Share in Packaged WaterOne of the key opportunities for Coca-Cola is the growing bottled market (see appendix 1: SWOT Analysis). The bottled market consists of sparkling flavored and unflavored water, still flavored and unflavored water.With an annual growth rate of 7% in 2006, this market is one of the most lucrative in terms of growth opportunities. In terms of this industry, Coca-cola with a market share of 7.3% in 2006 ranks only third behind Nestle and Danone.With key acquisitions such as Glaceau and its own brand of Dasani, Coca-Cola is in a favorable position to take advantage of growth in this market.
In order to grow along with the market it is essential that its packaged water products are readily available and marketed to countries it operates in. Further, it focus upon increasing its market share through increased penetration, effective marketing as well as looking out for acquisition/ joint ventures or partnerships with leading bottled water manufactured in the local markets of countries.Expand markets for Coke ZeroCoke Zero which is a Coca-cola tasting zero calorie drink was created with young adults in mind. With sales of over 450 millions cases and a reported global volume growth of 9% in 2007, Coke Zero has been one of the most successful brand launches in 25 years.
This has been introduced in 18 countries.As health consciousness is a growing concern in most countries Coke Zero can be one of the major growth drivers after being introduced more in European, Asian and Latin American Markets where it still does not enjoy a significant presence. Banking on Coke Zero’s success, it should increasingly be made available in more countries such as United Kingdom, France, Germany etc. And, more marketing ought to be done to promote this product.
Social ResponsibilityIn the recent past, Coca-cola has been exposed to a lot of negative publicity, for example the case of pesticides found in samples of Coca-cola and Pepsi in India. This negative publicity has really tarnished the image of the company in many countries. Coca-cola has been trying to regain its public image, however it needs to continuously campaign to make that happen. It takes into careful consideration environmental, economic and social factors while making decisions.
Coca-cola is associated with World Wildlife Fund and the UN Global Compact. Further it recycles and commits a lot of its resources to reducing its carbon footprint. Working together with their bottling partners and many nongovernmental organizations (NGOs), governments and community members, Coca-cola seeks to make a positive and meaningful difference around the world. This includes a focus on responsible environmental practices. With an increased investment in still beverages, coca-cola should seek to promote healthier beverage choices. Further, through adopting higher standards for bottling plants, consumers should be guaranteed that the safest and hygienic methods are being utilized for the manufacture of Coca-cola products.
With an increased commitment to be seen as a responsible company, Coca-cola is taking huge strides in creating a positive image of the company.Enhancing Brand ImageCoca-cola’s key strength is its Brand name ( See appendix z1). With a brand value of 78.5 billion dollars, Coca-cola is the world’s number one brand (Interbrand Top 500 brands, 2007). This may be attributed to the billions of dollars it spends on advertising each year in order to emotionally connect with the consumer, which in turn brings in the big bucks.
It is vital that Coca-cola ensures its dominance as the leading brand over the y years and thus should continue to pursue its strategy of building its brand through sponsorships of main sports and entertainment events such as the Olympics, set aside a large outlay for research in packaging, engage in innovative and effective product promotions and focus its efforts on extensive market programs.It is through Coca-Cola’s continued efforts on enhancing its brand image that it can win the hearts and minds of consumers.Growth through acquisitions and joint venturesCoca-cola has been entering into a lot of joint ventures and acquiring many companies over the past few years. Acquisitions are major drivers of growth in any company and contribute to their inorganic growth also.
The key acquisitions in the recent past are those of Glaceau (the maker of vitaminwater-the fast-growing, premier active?lifestyle beverage), Fuze, Jugoes del Valle and Leao Junior in Latin America, and a 40% interest in Honest Tea, an organic beverage company.While Coca-cola has made many acquisitions in the markets where it is present, it also needs to make acquisitions where it is not present or needs to bulk up.The focus should be on key acquisitions in high growth markets. The acquisition of Honest Tea will help Coca-Cola expand its presence in the fast-growing ready-to-drink tea category via an already established brand.
With that in mind, the company should look towards acquiring full interest in Honest Tea in the coming year or so.Looking aheadThe company has made great strides in strengthening its brand and in expanding the business to international markets. With diversification into the ‘still’ beverages market, the company is poised to be a key player in the juices, read to drink tea and coffee, bottled water, energy drinks, sports drink markets etc. The company would be well advised to focus its efforts on emerging markets, diversification of its portfolio, enhancing its brand image, growth through acquisitions and joint ventures in high growth markets.
