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Coca-Cola: The World's Largest Non-alcoholic Beverage Company

Submitted by:

BUSI 4940

Dr. Isaura Flores

Due Date
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Introduction

Coca-Cola Company is an American multinational corporation established in 1892.

The company is recognized for its production of Coca-Cola but it also manufactures, and sell

other non-alcoholic drinks. It has ruled the beverage industry for decades. As a loyal

consumer of Coca-Cola products, what I love most about this company is how it has built its

brand and dominance in the beverage industry and has grown globally to be a household

name. Hence, this has made Coca-Cola one of the largest companies in the US and one of the

most successful brands in beverage industry globally. Therefore, this text examines the Coca-

Cola Company with an interest in how it rose to its current position and various strategies that

the company has used to stand the competition in the beverage industry and survive other

challenges. The paper is divided into various sections starting with company background,

vision and core values, environmental analysis, industry size and growth, competition,

financial performance, Five Forces analysis, SWOT Analysis, current strategy, and

conclusion.

Company Background / History

Coca-Cola manufactures soft drinks and is one of the largest firms in the US and

operates in over 200 countries (Brondoni, 2019). The company is headquartered in Atlanta,

Georgia. It is recognized for its signature beverage, Coca-Cola. Dr. John Stith Pemberton, a

pharmacist, began the business on May 8, 1886, in Atlanta, Georgia, in the U S. Pemberton

first made a flavored syrup and combined it with carbonated water to use it as a tonic. Frank

Robinson coined the name "Coca-Cola" and developed the logo that is still in use. Coca-Cola

saw fast commercial success. It expanded its market and adopted aggressive marketing

strategies under Candler's direction, including the distribution of coupons for free Coca-Cola

drinks and the promotion of the brand through signage, calendars, and other materials.
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Coca-Cola has developed into a multibillion-dollar beverage empire, selling various

products. In addition to the well-known Coca-Cola brand, the business also owns and sells

several other recognized beverage brands, such as Diet Coke, Fanta, Dasani, Minute Maid,

and Sprite. The company's robust marketing initiatives, renowned brand, and large

distribution network contributed to its success. Coca-Cola has constantly invested in

marketing and sponsorships, tying its name to entertainment, sports, and charitable

endeavors. One of the most recognizable icons in the world is the Coca-Cola logo, with its

distinctive red color and recognizable writing.

Coca-Cola uses a franchising system and collaborates with independent bottlers

worldwide to produce, deliver, and sell its products. This strategy allows Coca-Cola to adjust

to local preferences and maintain a significant worldwide presence. Coca-Cola has increased

the number of products it offers in recent years in order to meet shifting consumer needs. It

has expanded into the ready-to-drink coffee and tea market and introduced low-calorie and

sugar-free variations of its products. Additionally, the business has committed to

sustainability, hoping to create a world free of waste by 2030 by collecting and recycling

packaging equal to each bottle. The Coca-Cola Company has undergone many changes and

suffered many difficulties. However, it continues to be one of the world’s most recognized

and identifiable brands, representing enjoyment, refreshment, and happy moments for people

worldwide.

Vision & Core Values

Coca-Cola's mission statement states the company's purpose and acts as the

benchmark against which the company weighs its actions and decisions. Its mission statement

is “To refresh the world in mind, body, and spirit, to inspire moments of optimism and

happiness through our brands and actions, and to create value and make a difference” (Baah

& Bohaker, 2015). This mission statement identifies three key elements: refreshing the world,
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spreading optimism and happiness, and making a difference. From refreshing the world

element, the company's purpose from the start was to refresh the world through its products.

Through making a difference, the company collaborates with other stakeholders to ensure

sustainable business and positive social impact.

Its vision is "to craft the brands and choice of drinks that people love, to refresh them

in body & spirit, done in ways that create a more sustainable business and better-shared

future that makes a difference in people's lives, communities, and our planet” (Baah &

Bohaker, 2015). From this vision, it is evident that the company seeks to create sustainable

businesses and impact lives. The company has been reflecting its business vision and mission

through its operations. On sustainability, the company has reduced sugar consumption,

limited carbon emissions, and enhanced water security. On impacting lives, the company has

been excelling in innovation, marketing, and design, making people love its products.

Furthermore, a company's core values describe its behavior and interactions with others. A

company that is defined with a strong internal culture helps it to survive and stay at the top of

the ranking in its industry. Coca-Cola has proven to be an iconic brand through its honest

core values such as leadership, integrity, accountability and collaboration.

Environmental Analysis

Industry Size & Growth

The non-alcoholic market revenues in 2023 amounted to US$1.45tn. The market's

annual growth is projected at 4.56% through 2027. As of 2023, soft drinks are leading in the

non-alcoholic market segment by a market volume of US$0.85tn.

Figure 1: Non-alcoholic drinks market share

Globally, most of the revenues are generated in the US, as witnessed by US$496.50 bn in

2023 (Statista, 2023). The market for non-alcoholic beverages, valued at USD 834.3 billion

in 2021, was projected to expand at a CAGR of 5.8% between 2022 and 2030. The main

factor propelling market expansion is customers' growing health consciousness. In order to

live a healthy lifestyle and experiment with alcohol-free beverages, the majority of

consumers worldwide are moving toward low and non-alcoholic beverages. As a result,

producers are researching this market and releasing a fresh iteration of the drinks. Non-

alcoholic beverages overtook low-alcoholic beverages in 2019–2020, according to the IWSR

research. Furthermore, non-alcoholic beverages have been growing in popularity among

customers, according to the Bacardi Trends Report 2021. Based on revenues by segment and

per capita, non-carbonated drinks is leading, followed by carbonated drinks and lastly energy

and sports drinks.

Figure 2: Revenues by segment

Figure 3: Revenues per capita

Some major soft drink industry players include Nestle SA, PepsiCo Inc, and the Coca-

Cola Company. The global soft drink market was valued at $413.46 billion in 2021 and was

projected to reach 621.66 billion by 2030. North America is the largest market. To increase

their sales, key industry leaders continuously develop new product iterations about

components, formulations, and packaging. For instance, in April 2019, Pepsi introduced three

different Cola varieties: Pepsi Mango, Pepsi Lime, and Pepsi Berry. The three brands aimed

at reducing sugar levels by approximately 50%. Consequently, the following year, it was
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predicted that the soft drinks market would be guided by introducing new products that

consider the health requirements of the target consumers.

However, the growth of the soft drinks markets is expected to be restrained by the

increasing obesity rates and associated issues (Clark, 2023). A growing number of consumers

are restricting their consumption of beverage products. Hence, the move is expected to

negatively impact the sales of carbonated drinks and other soft drink products. Awareness of

obesity and related complications such as diabetes and high blood pressure has caused the

demand for soft drinks to decline significantly, and the trend is expected to continue. Based

on the product, the market is divided into carbonated and noncarbonated drinks. Consumers

prefer noncarbonated to carbonated drinks, and the market for noncarbonated drinks is

expected to grow compared to that of carbonated drinks. Based on flavor, the market is

segmented into Citrus, Cola, and others. Over 50% of soft drinks are made of Cola flavor.

The demand for flavored drinks has been constantly increasing in the US. Analysis based on

region shows that the soft drink market is segmented into Europe, North America, Central

and South America, Asia-Pacific, and the Middle East and Africa (Nair et al., 2021). The

dominant market is North America. Regarding revenue, the North American region is

leading.

Competition

The non-alcoholic beverage market is highly competitive and has shown steady

growth. Coca-Cola is a leading player in the industry and ranks differently based on different

metrics such as price, customer services, product quality score, and net promoter score.

Figure 4: Competition
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Soft drinks, juices, energy drinks, bottled water, ready-to-drink teas and coffees, functional

beverages, and more are all part of this market. The non-alcoholic beverage market is

dominated by major multinational firms, including Coca-Cola Company, PepsiCo, and

Nestlé. These businesses have a competitive advantage thanks to their well-known brands,

vast distribution networks, and significant marketing budgets. In the non-alcoholic beverage

sector, innovation is a major competitive force. Businesses frequently create novel flavors,

formulas, and packaging to entice customers.

Health and well-being trends; there is a rising demand for healthier beverage options

due to rising health and well-being awareness. Due to this, specialized companies selling

natural, organic, low-sugar, and useful drinks have emerged. These smaller businesses

frequently concentrate on narrow target markets and offer products to customers looking for

alternatives to conventional carbonated soft drinks. In the non-alcoholic beverage market,

private label brands, usually referred to as store or retailer brands, have become more

popular. Retailers and supermarkets are creating their own beverage brands, providing

comparable rates, and utilizing their current clientele to increase sales. Also, many regional

and local players compete in certain geographic marketplaces in addition to international

enterprises. These businesses frequently concentrate on satisfying local tastes and preferences

by providing distinctive flavors and goods that appeal to the populace.

Financial performance

For the first quarter that ended March 31, 2023, Coca-Cola reported sales of USD

10,980 million, exceeding USD 10,491 million realized in 2022 at the same point in time

(Yahoo Finance, 2023). Similarly, in this first quarter, the net income was USD 3,107

million, an increase from 10,491 million a year ago. Also, diluted earnings per share from

continuing operations increased from USD 0.64 to USD 0.72 compared to 2022. The income

statement below shows that Coca-Cola's total revenues have been consistently increasing

from the financial year 2019 to 2022. Therefore, from this income statement, Coca-Cola is

performing well financially.

Figure 5: Income statement

Considering the past financial performance, the company has been growing earnings at an

average annual rate of 17.5%, compared to the 7.9% recorded in the beverage industry. Coca-

Cola’s revenues have been growing at an average of 4.6% annually.

Five Forces analysis

Coca-Cola Company operates in a highly competitive industry. A Five Forces

analysis helps to understand the competitive dynamics and attractiveness of the industry in

which Coca-Cola operates in.

The threat of New Entrants: The beverage business has very low entry barriers,

encouraging new rivals' entry, however, building a brand presence and distribution network

with the same global reach as Coca-Cola can be challenging. The company's strong brand

loyalty and substantial marketing initiatives are a further barrier to possible new competitors.

The threat posed by new competitors is generally moderate.

Suppliers' Bargaining Power: Coca-Cola depends on a huge network of suppliers

for its basic ingredients, including sugar, packaging, and flavorings. Over time, the

corporation has developed strong connections with these suppliers, giving it some negotiating

power.

Consumer bargaining power: The Coca-Cola Company sells its products through a

variety of outlets such as grocery shops and eateries. Due to the availability of alternate

beverage options, these customers have some leverage. Customers can change brands or

bargain for lower prices or better promotional offers. However, Coca-Cola has an advantage

in retaining customers thanks to its strong brand image, broad product selection, and

marketing initiatives. In general, purchasers have a reasonable amount of negotiating power.

The threat of Substitutes: There is a moderate threat of substitutes for the beverage

business. Customers can choose from various non-alcoholic beverages in addition to water,

coffee, tea, juices, and energy drinks. However, Coca-Cola has successfully expanded its

product line to include a variety of beverages, such as water and juices.

Competitive Rivalry Intensity: The beverage sector has many local, regional, and

international rivals. PepsiCo and other beverage producers compete with Coca-Cola. Pricing,

marketing, distribution, and brand recognition are the primary factors influencing the rivalry.

Coca-Cola has a competitive edge due to its great brand identity and broad distribution

network. However, the industry's fierce competition and continual innovation among rivals

put constant pressure on manufacturers to adapt and differentiate their products (New et al.,

2023).

Therefore, the Five Forces analysis indicates that Coca-Cola is well positioned within

the market despite the competitive challenges and possible threats due to its strong brand,

wide distribution network, and broad product line. To preserve its competitive edge, Coca-
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Cola should innovate continuously and adjust to shifting consumer tastes and market

conditions.

SWOT Analysis

SWOT analysis can help to evaluate a business's internal and external components affecting

its operation.

Strengths: First, Coca-Cola has a strong brand image. Coca-Cola is recognized for its

lengthy history, high standards, and consistency globally. Second, a wide-range distribution

network give Coca-Cola an advantage over competitors in various markets. The company

offers a wide range of beverages, allowing it to serve varied consumer tastes better and

expand its market share. Third, marketing and advertising prowess. The business has a

history of profitable marketing campaigns and successful advertising techniques, which have

aided in preserving and enhancing its brand reputation and client loyalty (Susilo, 2021).

Weaknesses: Concerns about health and wellness have resulted in a drop in demand

for sugary drinks, notably carbonated soft drinks, which comprise a sizable portion of Coca-

Cola's product line. Second, dependence on carbonated beverages. Despite expanding its

product line, Coca-Cola still heavily depends on these drinks for most of its sales, leaving it

subject to changes in customer tastes (Chua et al., 2020). Third, environmentally harmful

effects. Coca-Cola's production methods and packaging contribute to problems with trash

production and greenhouse gas emissions.

Opportunities: Expanding into healthier beverages. Coca-Cola can offer more low-

sugar and noncarbonated options, such as flavored water, bottled water, teas, and fruit juices,

in response to the rising demand for healthier and more useful beverages. Also, can partner or

acquire, where Coca-Cola may look into strategic alliances and acquisitions to broaden its

product line or penetrate new markets. This strategy allows the business to take advantage of

new trends and adapt to changing customer preferences.

Threats: The possibility for Coca-Cola to increase its market share and its ability to

set prices are both constrained by the high competition it encounters from other beverage

businesses on a global and local level. Also, there is a customer preference shifts. Coca-

Cola's traditional portfolio of carbonated soft drinks is in danger due to preference shifts

toward healthier, natural, and sustainable products, necessitating adaptation and

diversification (Mirror, 2023).

Current Strategy

Coca-Cola has used various techniques throughout the years to hold onto its market

position and promote growth. Based on branding and marketing, Coca-Cola is recognized for

its iconic branding. Their marketing efforts often involve creating memorable experiences

and associating their products with key events, such as the FIFA World Cup or the Olympics.

Geographic expansion; Coca-Cola is present all over the world and does business in

over 200 countries. The business is focused on growth in developing nations with booming

economies and people, such India and several African countries. To reach new consumer

bases and promote long-term growth, Coca-Cola wants to create a significant presence in

these markets. Acquisitions & collaborations: Coca-Cola has conducted strategic acquisitions

and collaborations to broaden its customer base and diversify its product offerings. For

instance, the business has partnered with or bought businesses that make and sell non-

alcoholic beverages like juice, water, and coffee. Through these alliances and purchases,

Coca-Cola take advantage of its current distribution systems and get access to complementary

product lines.

Focus on Health and Wellness: Coca-Cola has worked to offer healthier beverage

options in response to shifting consumer tastes and health-related worries. The company has

enlarged its selection of low-calorie and zero-calorie drinks, offered reduced-sugar and no-

sugar substitutes, and improved the clarity of the nutritional information on its packaging.
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Coca-Cola has also pledged to decrease the amount of sugar in its drinks and make smaller

portion sizes available. Coca-Cola has developed several sustainability and environmental

measures to lessen its influence on the environment. The business has concentrated on

reducing packaging waste, conserving water, and using more recycled materials. Coca-Cola

wants to refill the water it consumes in its products and create a circular economy for its

packaging. The specific strategies and initiatives of Coca-Cola evolve as consumer

preferences, market dynamics, and societal trends change. Like currently, due to innovation

and a rise in digital marketing, in its current marketing strategy, Coca-Cola is actively using

platforms such as YouTube, Snapchat, Facebook, Instagram, and Twitter to post videos,

images, and more (Li, 2023). Its current marketing strategy mainly relies on content

marketing, SEO, and video marketing.

Conclusion

Coca-Cola Company, founded in 1892, is a leading player in non-alcoholic beverages

and it has headquarter in Atlanta, Georgia, U.S. The company operates in a highly

competitive environment, but its core values, mission, and vision have made it stand strong

and thrive over decades despite high competition and other challenges in the external

business environment. Coca-Cola's dominance in the beverage industry and quality

consistency have made me love the company and its products. Although there is a projection

that soft drinks will record a decline in sales as more Americans are becoming concerned

with health and reducing their consumption of soft drinks due to health complications such as

diabetes and heart disease. However, Coca-Cola continues to enjoy success, as reflected in its

income statement in the last four years where the company's revenue has consistently been

increasing. North America has been the most important market for Coca-Cola. Overall, the

company faces some threats, such as high competition, but there are opportunities, such as

expanding into other healthier products that the company is employing. Over time, Coca-Cola
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has used different strategies such as products diversification and partnership and acquisition

to ensure its survival. Lately, the company has been concentrating on delivering healthy

products and ensuring sustainability at the same time. Its current marketing strategy is digital

marketing, where the company is embracing platforms such as Facebook and Instagram to

reach a large audience. Although the corporate strategies that Coca-Cola uses change based

on consumer preferences, market dynamics, and societal trends.

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