Project Report On

Coca-Cola

Submitted By :
Submitted To :
 Hitesh Kukreja Brij
Mohan Sir

Table of Contents :
1. Introduction
2. Industry Profile
3. Company Profile :
 Cola – Cola company
 Global Market Share
 Trends and Forces
 Porter’s Five Forces
 Pestle Analysis
 SWOT Analysis
 Coca – Cola India
 Products in India
 Marketing Mix
 Pestle Analysis
 SWOT Analysis
4. Suggestions
 5. Conclusion
Introduction
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 produce nearly 400 beverage brands. It sells beverage
concentrates and syrups to bottling and canning operators,
distributors, fountain retailers and fountain wholesalers. The
Company’s beverage products comprise 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
sports drinks, tea and coffee. The Coca- Cola Company began
building its global network in the 1920s. Now operating in more
than 200 countries and producing nearly 400 brands, the Coca-
Cola system has successfully applied a simple formula on a global
scale: “Provide a moment 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 and pervasive production and distribution
system in the world. More than anything, that system is dedicated
to people working long and hard to sell the products manufactured
by the Company. This unique worldwide system has made The
Coca-Cola Company the world’s premier soft-drink enterprise.
From Boston to Beijing, from Montreal to Moscow, Coca-Cola, more
than any other consumer product, has brought pleasure to thirsty
consumers around the globe. For more than 115 years, Coca-Cola
has created a special moment of pleasure for hundreds of millions
of people every day.
The Company aims at increasing shareowner value over time. It
accomplishes this by working with its business partners to deliver
satisfaction and value to consumers through a worldwide system
of superior brands and services, thus increasing brand equity on a
global basis. They aim at managing their business well with people
who are strongly committed to the Company values and culture
and providing an appropriately controlled environment, to meet
business goals and objectives. The associates of this Company
jointly take responsibility to ensure compliance with the
framework of policies and protect the Company’s assets and
resources whilst limiting business risks.
 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 less thought into
the purchase of FMCG than they do for other products.

The Indian FMCG industry witnessed significant changes through

the 1990s. Many players had been facing severe problems on
account of increased competition from small and regional 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 and customer service strategies to
strengthen their position in the market.

By the turn of the 20th century, the face of the Indian FMCG
industry had changed significantly. With the liberalization and
growth of the Indian economy, the Indian customer witnessed an
increasing exposure to new domestic and foreign products
through different media, such as television and the Internet. Apart
from this, social changes such as increase in the number of
nuclear families and the growing number of working couples
resulting in increased spending power also contributed to the
increase in the Indian consumers' personal consumption. The
realization of the customer's growing awareness and the need to
meet changing requirements and preferences on account of
changing lifestyles required the FMCG

producing companies to formulate customer-centric strategies.

These changes had a positive impact, leading to the rapid growth
in the FMCG industry. Increased availability of retail space, rapid
urbanization, and qualified manpower also boosted the growth of
the organized retailing sector.

HLL led the way in revolutionizing the product, market, distribution

and service formats of the 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 led initiatives in the 2003 budget such as the setting
up of excise free zones in various parts of the country that
witnessed firms moving away from outsourcing to manufacturing
by investing in the zones.
Though the absolute profit made on FMCG products is relatively
small, they generally sell in large numbers and so the cumulative
profit on such products can be large. Unlike some industries, such
as automobiles, computers, and airlines, FMCG does not suffer
from mass layoffs every time the economy starts to dip. A person
may put off buying a car but he will not put off having his dinner.

Unlike other economy sectors, FMCG share float in a steady

manner irrespective of global market 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 the Indian Economy and is worth Rs.93000 cr. The
main contributor, making up 32% of the sector, is the South Indian
region. It is predicted that in the year 2010, the FMCG sector will
be worth Rs.143000 cr. The sector being one of the biggest
sectors of the Indian Economy provides up to 4 million jobs.

A brief insight – Beverage industry in India :

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

The beverage industry is vast and there are various ways of

segmenting it, so as to cater the right 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 consumption and low levels of consumption.

If the behavioral patterns of consumers in India are closely

noticed, it could be observed that consumers perceive beverages
in two different ways i.e. beverages are a luxury and that
beverages have to be consumed occasionally. These two
perceptions are the biggest challenges faced by the beverage
industry. In order to leverage the beverage industry, it is
important to address this issue so as to encourage regular
consumption as well as and to make the industry more
affordable.
Four strong strategic elements to increase consumption of the
products of the beverage industry in India are:

 The quality and the consistency of beverages needs to be

enhanced so that consumers are satisfied and they enjoy
consuming beverages.
 The credibility and trust needs to be built so that there is a
very strong and safe feeling that the consumers have while
consuming the beverages.
 Consumer education is a must to bring out benefits of
beverage consumption whether in terms of health, taste,
relaxation, stimulation, refreshment, well-being or prestige
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 spread of distribution. It is important to look
at the entire beverage market, as a big opportunity, for
brand and sales growth in turn to add up to the overall
growth of the food and beverage industry in the economy.
 BEVERAGES

NON-
ALCOHOLIC
ALCOHOLIC

NON-
CARBONATED
CARBONATED

COLA NON-COLA NON-COLA

Fig. Beverages in India

Company Profile
MISSION:

Our Roadmap starts with our mission, which is enduring. It declares

our purpose as a company 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.

VISION:
Our vision serves as the framework for our Roadmap and guides
every aspect of our business by describing what we need to
accomplish in order to continue achieving sustainable, quality growth.
 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 anticipate and satisfy people's desires and needs.
 Partners: Nurture a winning network of customers and suppliers,
together we create mutual, enduring value.
 Planet: Be a responsible citizen that makes a difference by
helping build and support sustainable communities.
 Profit: Maximize long-term return to shareowners while being
mindful of our overall responsibilities.
 Productivity: Be a highly effective, lean and fast-moving
organization.
WINNING CULTURE:
Our Winning Culture defines the attitudes and behaviors that will be
required of us to make our 2020 Vision a reality.

LIVE OUR VALUES :

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.
 Focus on execution in the marketplace every day.
 Be insatiably curious.
WORK SMART:
 Act with urgency.
 Remain responsive to change.
 Have the courage to change course when needed.
 Remain constructively discontent.
 Work efficiently.
History of Coca - Cola :

The prototype Coca-Cola recipe was formulated at the Eagle Drug and
Chemical Company, a drugstore in Columbus, Georgia by John
Pemberton, originally as a coca wine called Pemberton's French Wine
Coca. He may have been inspired by the formidable success of Vin
Mariani, a European cocawine.

In 1886, when Atlanta and Fulton County passed prohibition

legislation, Pemberton responded by developing Coca-Cola,
essentially a non-alcoholic version of French Wine Coca. The first
sales were at Jacob's Pharmacy in Atlanta, Georgia, on May 8, 1886. It
was initially sold as a patent medicine for five cents a glass at soda
fountains, which were popular in the United States at the time due to
the belief that carbonated water was good for the health.[9] Pemberton
claimed Coca-Cola cured many diseases, including morphine
addiction, dyspepsia, neurasthenia, headache, and impotence.
Pemberton ran the first advertisement for the 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 the market. Asa Griggs Candler acquired a
stake in Pemberton's company in 1887 and incorporated it as the
Coca Cola Company in 1888. The same year, while suffering from an
ongoing addiction to morphine, Pemberton sold the rights a second
time to four more businessmen: 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 two manufacturers could continue to use the
formula. So, in the summer of 1888, Candler sold his beverage under
the names Yum Yum and Koke. After both failed to catch on, Candler
set out to establish a legal claim to Coca-Cola in late 1888, in order to
force his two competitors out of 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
her signature on the bill of sale had been forged, and subsequent
analysis has indicated John Pemberton's signature was most likely a
forgery as well.

In 1892 Candler incorporated a second company, The Coca-Cola

Company (the current corporation), and in 1910 Candler had the
earliest records of the company burned, further obscuring its legal
origins. By the time of its 50th anniversary, the drink had reached the
status 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 wall advertisement was painted in the same year as well
in Cartersville, Georgia. Cans of Coke first appeared in 1955. The first
bottling of Coca-Cola occurred in Vicksburg, Mississippi, at the
Biedenharn Candy Company in 1891. Its proprietor was Joseph A.
Biedenharn. The original bottles were Biedenharn bottles, very
different from the much later hobble-skirt design that is now so
familiar. Asa Candler was tentative about bottling the drink, but two
entrepreneurs from Chattanooga, Tennessee, Benjamin F. Thomas
and Joseph B. Whitehead, proposed the idea and were so persuasive
that Candler signed a contract giving them control of the procedure
for only one dollar. Candler never collected his dollar, but in 1899
Chattanooga became the site of the first Coca-Cola bottling company.
The loosely termed contract proved to be problematic for the
company for decades to come. Legal matters were not helped by the
decision of the bottlers to subcontract to other companies, effectively
becoming parent bottlers. Coke concentrate, or Coke syrup, was and
is sold separately at pharmacies in small quantities, as an over-the-
counter remedy for nausea or mildly upset stomach.

On April 23, 1985, Coca-Cola, amid much publicity, attempted to

change the formula of the drink with "New Coke". Follow-up taste
tests revealed that most consumers preferred the taste of New Coke
to both Coke and Pepsi, but Coca-Cola management was unprepared
for the public's nostalgia for the old drink, leading to a backlash. The
company gave in to protests and returned to a variation of the old
formula, under the name Coca-Cola Classic on July 10, 1985.

On February 7, 2005, the Coca-Cola Company announced that in the

second quarter of 2005 they 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 another diet product, Coca-Cola Zero, sweetened partly
with a blend of aspartame and acesulfame potassium. In 2007, Coca-
Cola began to sell a new "healthy soda": Diet Coke with vitamins B 6,
B12, magnesium, niacin, and zinc, marketed as "Diet Coke Plus”. On
July 5, 2005, it was revealed that Coca-Cola would resume operations
in Iraq for the first time since the Arab League boycotted the
company in 1968.

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

back to "Coca-Cola." 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-ounce bottles sold in parts of the southeastern United
States. The change is part of a larger strategy to rejuvenate the
product's image. In November 2009, due to a dispute over wholesale
prices of 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. An increased consumer preference for healthier
drinks has resulted in slowing growth rates for sales 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 make drinks - such as the corn syrup used
as a sweetener, the aluminum used in cans, and the plastic used
in bottles.
Furthermore, slowing consumer spending in Coke's large North
American market compounds the challenge of increasing costs
and a weak economic environment. Finally, Coca-Cola earns
approximately 75% of revenue from international sales, 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 is growing quickly, the traditional CSD
market is still large in terms of both revenues and volume 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 to maintain its share of this important market. KO
has also responded to consumers’ changing tastes 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.[7] Since spinning of
Coca-Cola Enterprises (CCE) 24 years ago, the soft drink market
has changed dramatically with consumers buying fewer soft drinks
and more non-carbonated beverages, such as Powerade and
Dasani water.
Under the new deal, Coca-Cola Company will take control of the
bottler's North America operations, giving the company control
over 90% of the total North America volume. In return, Coca-Cola
Enterprises will take over Coke's bottling operations in Norway and
Sweden, becoming a European-focused producer and distributor.
In March 2010, Coca-Cola Company entered into discussions to
buy the Russian juice company, OAO Nidan Juices. The company is
75% owned by a private equity firm in London and 25% by its
Russian founders and controls 14.5% of the Russian juice market.
If successful, 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 estimates of
Nidan's purchase price are between $560-$620 million.
In April 2010, Coca-Cola Company purchased a majority share of
Innocent, the British fruit smoothie 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) $715 million for the continued right to sell
their products following the company's acquisition of Coca-Cola
Enterprises (CCE). The deal covers the next 20 years with an
option to renew for an 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 States but countries from all over the world
have felt the impacts of the 2008 Financial Crisis. This may be a
problem for Coke, which derives approximately 75% of its sales
from outside North America. Still, the company has positioned
itself well in international markets both organically and through
acquisitions, such as that of Chinese juice maker Huiyuan for $2.4
billion. However, the company was unsuccessful with its purchase
of Huiyuan as it broke antitrust laws in China. On March 5, 2010,
Coke's CEO said that emerging markets are bouncing back quicker
than more developed markets.

 New Aversion to Soda Threatens Main Business:

74% of the Coca Cola Company's products are classified as

carbonated soft drinks, making it particularly sensitive to changes
in demand for CSD. Consumer demand for CSD has been
negatively affected by concerns about health and wellness. This is
true across most of KO's markets. There has been an increase in
the number of regulations regarding CSD in the United 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 Centre for Science and Public
Interest proposed that a warning label be placed on all beverages
containing more than 13g of sugar per 12-oz serving. This
proposal would affect all non-diet, full calorie drinks produced by
KO. These factors have driven a shift in consumption away from
CSD to healthier alternatives, such as tea, juices, and water.

Within the CSD segment consumers have been moving away from
sugared drinks, opting instead 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 has recently begun to increase its
development of both diet CSD and non-CSD beverages. KO is
faced with the task of balancing the risk of new innovations with
the low growth rates of established 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 flagging beverage maker, one of the first areas
that he targeted for improvement was KO's frayed relations with
its extensive network of bottlers. Since consolidating all company-
owned bottlers into the Bottling Investments division, Isdell has
continued to increase KO's interest in its bottlers through stake
purchases or outright buyouts. This strategy represents a
weakening of the division between KO's production and
distribution operations. Isdell believes that by combining
production and distribution operations the company will have
enhanced its ability to quickly respond to changing market
conditions. In KO's 2007 Q3 Analyst 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 agreements with 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 tea made by Ferolito, Vultaggio & Sons, an American iced-
tea company. Isdell sees these agreements 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 emblematic of the bottled water industry as a
whole. In August 2009, the Wall Street Journal reported that sales
of bottled water had fallen for the first time in five years. The
combination of the recession and upper class consumers'
increased environmental consciousness has led many customers
to cut back on bottled water in flavor of tap water and reusable
containers.

Following this trend, at least one town in Washington state and

one in Australia have outlawed the selling of bottled water within
their city limits. In 2008, bottled water was the third most popular
beverage (behind soda and milk), but compared to 2007,
Americans consumption declined 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 back anytime soon.

 Dollar Affects International Performance:

Another trend affecting Coca-Cola is the relative strength of the

U.S. Dollar (USD). Although the company is based in the US, KO
derives about 75% of its operating income from outside United
States. Because of this, the company is very sensitive to the
strength of the dollar. As foreign currencies weaken relative to the
dollar, goods sold in foreign markets are suddenly worth fewer
dollars back in the US, lowering earnings. Thus, if the dollar
strengthens (as it did 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
by 10-12% and 4Q09 operating income by high single digits.
KO has broad exposure to foreign currencies and actively hedges a
large portion of these to avoid wide swings in earnings from
currency fluctuations. Although this hedging insulates from the
potential downside of a strengthening dollar, it also limits larger
gains from drastic downswings in the dollar's value.

 Commodity Cost Fluctuations Affect Margins:

The Coca-Cola Company’s profitability can be affected both

directly and indirectly by the costs of various production inputs.
KO itself is responsible for purchasing the raw materials used to
make its concentrates and syrups. Variations in the prices for
these goods can affect the company’s total cost of production as
well as its profit margins. Changes in the production 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 forced to drastically raise
prices to compensate.

Such a price increase would likely hurt KO, given the competitive
nature of the non-alcoholic beverage industry, and provide a
possible incentive for consumers to switch to other companies’
beverages.

Aluminum, corn, and PET resin are three examples of such

production goods used by bottlers that could have significant
bearing on the Coca-Cola Company’s profit margins. In 2007, the
prices of these commodities rose drastically with general
commodities bubble and dramatically pressured margins. They
receded in 2008, but the possibility of another significant rise in
Commodities represents a constant threat to profits.

Porter’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 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 National Beverage Company make
up the remaining market share. All five of these companies make
a portion 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 for Coca-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 with a market share of 21%.

According to Beverage Digest's 2008 report on carbonated soft

drinks, PepsiCo's U.S. market share has increased to 30.8%, while
the Coca-Cola Company's has decreased to 42.7% due to Pepsi
marketing schemes still the higher large gap between the market
share can be attributed to the fact that Coca-Cola took advantage
of Pepsi entering the market late and has set up its bottler's and
distribution network especially in developed markets.

"The Coca - Cola Company" is the largest soft drink company in

the world. Every year 800,000,000 servings of just "Coca-Cola" are
sold in the United States alone. Bottling plants with some
exceptions are locally owned and operated by independent
business people who are native to the nations in which they are
located. Coca-Cola manufactures, distributes and markets non-
alcoholic beverage concentrates and syrups, including fountain
syrups.

It supplies concentrates and beverage bases used to make the

products and provides management assistance to help its bottler's
ensure the profitable growth of their business. This has put Pepsi
at a significant disadvantage compared to US market. Overall,
Coca-Cola continues 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 after a new government ordered, The Coca-
Cola Company to turn over its secret formula for Coke and 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 Punjab government-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
brands was 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, The
Coca-Cola Company and PepsiCo together held 95% market share
of soft-drink sales in India. 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 the Cold War ended. In 1972, Pepsi Co
Company struck a barter agreement with the government of the
Soviet Union, in which Pepsi Co was granted exportation and
Western marketing rights 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 U.S.S.R. Pepsi, as one of the first
American products in the Soviet Union, became a symbol of that
relationship and the Soviet policy.

Brand name loyalty is another competitive pressure. The Brand

Keys Customer Loyalty Leaders 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 their brands. 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 emerging economies where the dominance of
Coke is not as pronounced, with the growth in emerging markets
significantly expected to exceed the developed markets, rivalry in
international market is going to be more pronounced.

Pepsi advertisements often focused on celebrities, choosing Pepsi

over Coke, supporting Pepsi's positioning as "The Choice of a New
Generation." In 1975, Pepsi began showing people doing blind
taste tests called Pepsi Challenge in which they preferred one
product over the 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 on billions of
packages and cups. They could redeem the points for free Pepsi
lifestyle merchandise. After researching and testing the program
for over two years to ensure that it resonated with consumers,
Pepsi launched Pepsi Stuff, which was an instant success.

Tens of millions consumers participated. Pepsi outperformed Coke

during the summer of the Atlanta 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's international markets worldwide. The company
continued to run the program for many years, continually
innovating with new features each year.
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 Pepsi Stuff
ending its services and Coke Rewards still offering prizes on their
website. Both were loyalty programs that give away prizes and
product to consumers after collecting bottle caps and 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 various products with their "Pepsi
Points", such as mp3 downloads. Both Coca-Cola and coke
previously had a partnership with the iTunes Store.

 POTENTIAL ENTRANTS :

New entrants are not a strong competitive pressure for the soft
drink industry. Coca-Cola and Pepsi 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 very difficult for new, unknown entrants to
start competing against the existing firms.

Another barrier to entry is the high fixed costs for warehouses,

trucks, and labor, and economies of scale. New entrants cannot
compete in price without economies of scale. These high capital
requirements and market saturation make it extremely difficult for
companies to enter the soft drink industry therefore new entrants
are not a strong competitive force.
 Capital requirements for producing, promoting, and establishing
a new soft drink traditionally have been viewed as extremely high.
According to industry experts, this makes the likelihood of
potential entry by new players quite low, except perhaps in much
localized situations that matter little to Coke or Pepsi. Yet, while
this view may reflect conventional wisdom, 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 of 1992, when
they both were not able to explain a drop in their June 1992 sales.

 SUBSTITUTES :

Numerous beverages are available as substitutes for soft drinks.

Citrus beverages and fruit juices are the more popular substitutes.
Availability of shelf space in retail stores as well as advertising and
promotion traditionally has had a significant effect on beverage
purchasing behaviour. 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 centered on the

power struggle between Coke and Pepsi. But as the pop fight has
topped out, the industry's giants have begun relying on new
product flavors and looking to noncarbonated beverages for
growth.”
Substitute products are those competitors that are not in the soft
drink industry. Such substitutes 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 health conscious consumer. There are
progressively more varieties in the water and sports drinks that
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. The consumers who purchase a lot of soft
drinks may substitute coffee if they want to keep the caffeine and
lose the sugar and carbonation.

Blended coffees are also becoming popular with the increasing

number of Starbucks, Barista and CCD stores that offer many
different flavors to appeal to all consumer markets. It is also cheap
for consumers to switch to these substitutes making the threat of
substitute products very strong (Data monitor, 2005).

The growth rate has been recently criticized due to the market
saturation of soft drinks. Data monitor (2005) stated, “Looking
ahead, despite solid growth in consumption, the global 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 also expected to increase in growth as competitors start
adopting new product lines.

Profitability in the soft drink industry will remain rather solid, but
market saturation has caused analysts to suspect a slight
deceleration of growth in the industry (2005). Because of this, 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 to diversify 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 other brands 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 of Coke-
to bottle the companies' products and to whom each company
sells its patented syrups or concentrates. While Coke and Pepsi
issue their franchise, these bottlers are in effect the 'conduit'
through which these international cola brands get to local
consumers

Through the early 1980's, Coke's domestic bottlers were typically

independent family businesses deriving from franchises issued
early in the century. Pepsi had a collection of similar franchises,
plus a few large franchisees that owned many locations. Until
1980, Coke and Pepsi were somewhat restricted in owning
bottling facilities, which was viewed as a restraint of free trade.
Jimmy Carter, a Coke fan, changed that by signing legislation to
allow soft-drink companies to own bottling companies or
territories, plus upholding the territorial integrity of soft-drink
franchises, shortly before he left office.

Also, the three most important channels for soft drinks are
supermarkets, fountain sales, and vending. In 1987, supermarkets
accounted for about 40% of total U.S. soft drink industry sales,
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 of bottling companies, Coca-Cola uses its own
network of wholesalers for their fountain syrup distribution, and
Pepsi distributes its fountain syrup through its bottlers.

 BARGANING POWER OF SUPPLIERS :

 The principal raw material used by the soft-drink industry in the
United States is high fructose 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
is sucrose. It likewise is available from numerous sources.

Another raw material increasingly used by the soft-drink industry

is aspartame, a sweetening agent used in low-calorie soft-drink
products. Until January 1993, aspartame was available from just
one source -the NutraSweet Company, a subsidiary of the
Monsanto Company- in the 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 expired aspartame patents as only enhancing
their power relative to suppliers.

Pestel Analysis of Coca - Cola :

PESTLE stands for Political, Economic, Social, Technological, Legal

and Environmental. It is a tool that helps the organizations for
making strategies and to know the EXTERNAL environment in
which the organization is working and is going to work in the
future.

Coca-Cola beverage, which is the leading manufacturer and

distributor of non-alcoholic drinks 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 fast growing economy.

Political Analysis :

Political factors are how far a government intervenes in the

operations of the company. The political factors may include tax
policy, trade restrictions, environmental policy, laws imposed on
the recruiting labors, amount of permitted goods by the
government and the service provided by the government.

Globally, Coca-Cola beverages being a non-alcoholic industry falls

under the FDA (Food and Drug Administration) , it is an agency in
the United States Department of Health and Human Services. Its
headquarters is in USA and it has started opening offices in foreign
countries as well. The job of the FDA is to check and certify
whether the ingredients used in the manufacturing of Coca-Cola
products in the particular country is meeting to the standards or
not. In Coca-Cola the company takes all the necessary steps to
analyze thoroughly before introducing any ingredients in its
products and get prior approval from the FDA. The company also
has to take into consideration of the regulation imposed by FDA on
plastic bottled products.

Apart from FDA the other political factors include tax policies and
accounting standards. The accounting standards used by the
company changes from time to time which have a significant role
in the reported results.

The company also is subjected to income tax policies according to

the jurisdiction of various countries. In addition to this, the
company is also subjected to import and excise duties for
distribution 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 the political activists may decline the
demand for the products. Also the situations like the unsure
conditions prevailing in Iraq and escalation of the terrorist
activities in these areas could affect the international market of
our product. It creates an inability for the company to penetrate in
the markets of such countries.

Economic Factors :

The economic factors analyze the potential areas where the firm
can grow and expand. It includes 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 that country. When there is an economic
growth in the country, the purchasing power among people
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 across various countries. The
net operating profits for the company outside US stands at around
72%. 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 currency exchange
rates. A strong and weak currency tends to affect the exporting of
the products globally.

Interest rates are the rate which is imposed on the company for
the money they have borrowed from government. When there is
an increase in the interest rates, it may deter the company in
further investment as the cost for borrowing is higher. Coca-Cola
uses derivative financial instruments to cope up with the
fluctuating interest rates. Inflation and wage rate go hand in hand,
when there is an increase in the inflation the employee demand
for a higher wage 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 the final product as the competition and
risk in this segment is higher. This is a threat in the external
environment faced by the company. From the above explanation it
is clearly seen that the economic factors involve a major impact in
the behavior of the company during various economic situations.

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 the
social factors but the company has to adjust itself to the changing
society. The company adapts 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 are the most important factors to
consider. Each and every country has a unique culture and
attitude among the people. It is very important to know about the
culture before marketing in a particular country. Coca-Cola has
about 3300+ products in their stable, when entering into a country
it does not introduce all the products. It introduces minimum
number of products according to the culture of the country and
the attitude of the people.

Consumers and government are becoming increasingly aware of

the public health consequences, mainly obesity which is the
second social factor in the soft drinks industry. It inspired the
company to venture into the areas of Diet coke and zero calorie
soft drinks. The problem of obesity is taken seriously among the
youngsters who like to maintain a good physique. Hence coke
introduced dietary products for those youngsters who can enjoy
coke with zero calories. In one of the study it is said that
“Consumer from the age groups 37 to 55 are also increasingly
concerned with nutrition”. Since many are aware, they are
concerned with the longevity of their lives. This will affect the
demand of the company in the existing product 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 is very important because non-alcoholic
markets have most of its share from the children and youngsters.
Adults used to celebrate mostly with alcohol. The age distribution
of the country becomes important for the success of the product in
a country.

Technological Factors :

Technology plays a varied role in the soft drinks industry. The

manufacturing and distribution of the products is relatively a Low-
Tech business, although the creation of a new product with the
perfect blend and taste is a science (an art in itself).

Technological contributions are most important in packaging. The

company rely on their bottling partners for a significant portion of
their business. Nearly 83% of the worldwide unit case volume is
manufactured and distributed by their bottling partners in whom
the company does not have controlling power. Hence it is
necessary for the company to maintain a cordial relation 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 the availability of Coca-Cola, it
introduced general vending machines all over the world. In
products it led to the development of new products like Cherry
Coke, Diet Coke etc. The technical advancement in the bottling
industries include, introduction of recyclable and non-refillable
bottles, introduction of cans which are trendy, stylish and popular
among the youngsters.

Legal Factors :
The legal factors include discrimination law, customer law,
antitrust law, employment law and health and safety law. In Coca-
Cola the business is subjected to various laws and regulation in
the numerous countries in which they do the business, the laws
include competition, product safety, advertising and labelling,
container deposits, environment protection, labor practices.

In the US the products of the company is subjected to various acts

like Federal Food, Drug and Cosmetic Act, the Federal Trade
Commission Act, Occupation Safety and Health Act, various
environment related acts and regulations, the production,
distribution, sale and advertising of all the products are subjected
to various laws and regulations. Changes in these laws could result
in increased costs and capital expenditures, which affects the
company profitability and also the production and distribution of
the products.
Various jurisdictions may adopt significant regulations in the
additional product labelling and warning of certain chemical
content or perceived health consequences. These requirements if
become applicable in the future the company must be ready to
accept and have necessary changes in hand for the same.

Environment Factors :
These factors include the environment such as the weather
conditions and the seasons in which people prefer to buy cool
beverages. Also the company must follow the environmental
issues 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 plastic in the
PET bottles is followed by the company strictly.
SWOT Analysis of Coca – Cola :

STRENGTHES :

 WORLD’S LEADING BRAND :

Coca-Cola has strong brand recognition across the globe. The

company has a leading brand
value 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 in
2006.The Business Week-Inter-brand valued Coca-Cola at $67,000
million in 2006. Coca-Cola ranks well ahead of its close competitor
Pepsi which has a ranking of 22 having a brand value 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, Cherry
Coke and Coke with Lemon. Over the years, the company has
made large investments in brand promotions. Consequently, Coca
- Cola is one of the best recognized global brands. The
company’s strong brand value facilitates customer recall and
allows Coca-Cola to penetrate new 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 is the largest manufacturer,
distributor and marketer of non-alcoholic beverage concentrates
and syrups in the world. Coco-Cola is selling trademarked
beverage products since the year 1886 in the US. The company
currently sells its products in more than 200 countries. Of the
approximately 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 1.4 billion.

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 manufacturing
plants located throughout the world.

In addition, it owns or has interest in 37 operations with 95

principal beverage bottling and canning plants located outside the
US. The company also owns bottled water production and still
beverage facilities as well as a facility that manufactures juice
concentrates. The company’s large scale of operation allows it to
feed upcoming markets with relative ease and enhances its
revenue generation capacity.

 ROBUST REVENUE GROWTH IN 3 SEGMENTS :

Coca-Cola’s revenues recorded a double digit growth, in three
operating segments. These three segments are Latin America,
‘East, South Asia, and Pacific Rim’ and Bottling investments.
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. Robust revenues growth rates
in these segments contributed to top-line growth for Coca-Cola
during 2006.

WEAKNESS :

 NEGATIVE PUBLICITY :

The Coca - Cola Company has been involved in a number of

controversies and lawsuits related to its relationship with human
rights violations and other perceived unethical practices. There
have been continuing criticisms regarding the Coca-Cola
Company's relation to the Middle East and U.S. foreign policy. The
company received negative publicity in India during September
2006.The company was accused by the Centre for Science and
Environment (CSE) of selling products containing pesticide
residues. Coca-Cola products sold in and around the Indian
national capital region contained a hazardous pesticide residue.
On 10 December 2008, the US Food and Drug Administration
(FDA) wrote to Mr. Muhtar Kent, President and Chief Executive
Officer, to warn him that the FDA had concluded that Coca-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 a class-action lawsuit against Coca-Cola.
The lawsuit was in regards to claims made, along with the
company's flavours, of Vitamin Water. Claims say that the
33 grams of sugar are more 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, a strong
performance in North America is important for the company.

In North America the sale of unit cases did not record any growth.
Unit case retail volume in North America decreased 1% primarily
due to weak sparkling beverage trends in the second half 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. Sluggish performance in
North America could impact the company’s future growth
prospects and prevent Coca-Cola from recording a more robust
top-line growth.

 DECLINE IN CASH FROM OPERATING ACTIVITIES :

The company’s cash flow from operating activities declined during

fiscal 2006. Cash flows from operating activities decreased 7% in
2006 compared to 2005. Net cash provided by operating 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 a result of a contribution of approximately
$216 million to a tax-qualified trust to fund retiree medical
benefits.

The decrease was also the result of certain marketing accruals

recorded in 2005.Decline in cash from operating activities reduces
availability of funds for the company’s investing and financing
activities, which, in turn, increases the company’s exposure to
debt markets and fluctuating interest rates.
OPPORTUNITIES :

 ACQUISITIONS :

During 2006, its acquisitions included Kerry Beverages, (KBL),

which was subsequently, reappointed Coca-Cola China Industries
(CCCIL). Coca-Cola acquired a controlling shareholding in KBL, its
bottling joint venture with the Kerry Group, in Hong Kong.
The acquisition extended Coca-Cola’s control over manufacturing
and distribution joint ventures 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 South

Africa. Coca-Cola also made acquisitions in Australia and New

Zealand during 2006. These acquisitions strengthened Coca-Cola’s
international operations.

These also give Coca- Cola an opportunity for growth, through new
product launch or greater penetration of existing markets.
Stronger international operations increase the company’s capacity
to penetrate international markets and also gives it an opportunity
to diversity its revenue stream. On 25 February 2010, Coco cola
confirms to acquire the Coca cola enterprises (CCE) one the
biggest bottler in North America. This strategy of coca cola
strengthens its operations internationally.

 GROWING BOTTLED WATER MARKET :

Bottled water is one of the fastest-growing segments in the
world’s food and beverage market owing to increasing health
concerns. The market for bottled water in the US generated
revenues of about $15.6 billion in 2006.
Market consumption volumes were estimated to be 30 billion liters
in 2006. The market's consumption volume is expected to rise to
38.6 billion units by the end of 2010. This represents 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 of 2010. In the bottled water market, the
revenue of flavored water (water-based, slightly sweetened
refreshment drink) segment is growing by about $10 billion
annually. The company’s Dasani brand water is the third best-
selling bottled water in the US. Coca-Cola could leverage its strong
position in the bottled water segment to take advantage of
growing demand for flavored water.

 GROWING HISPANIC POPULATION IN U.S :

Hispanics are growing rapidly both in number and economic

power. As a result, they have become more important to
marketers than ever before. In 2006, about 11.6 million US
households were estimated to be Hispanic. This translates into a
Hispanic population of about 42 million.

The US Census estimates that by 2020, the Hispanic population

will reach 60 million or almost 18% of the total US population. The
economic influence of Hispanics is growing even faster than their
population. Nielsen Media Research estimates that the buying
power of Hispanics 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. The company can benefit from an expanding
Hispanic population in the US, which would translate into higher
consumption of Coca-Cola products and higher revenues for the
company.

THREATS :

 INTENSE COMPETITION :

Coca-Cola competes in the non-alcoholic beverages segment of

the commercial beverages industry. The company faces intense
competition in various markets from regional as well as global
players. Also, the company faces competition from various non-
alcoholic sparkling beverages including juices and nectars and
fruit drinks. In many of the countries in which Coca-Cola operates,
including the US, PepsiCo is one of the company’s primary
competitors. Other significant competitors include Nestle, Cadbury
Schweppes, Group DANONE and Kraft Foods.

Competitive factors impacting the company’s business include

pricing, advertising, sales promotion programs, product
innovation, and brand and trademark development and protection.
Intense competition could impact Coca-Cola’s market share and
revenue growth rates.

 DEPENDENCE ON BOTTLING PARTNERS :

Coca-Cola generates most of its revenues by selling concentrates
and syrups to bottlers in whom it doesn’t have any ownership
interest or in which it has no controlling ownership interest. In
2006, approximately 83% of its worldwide unit case volumes were
produced and distributed by bottling partners in which the
company did not have any controlling interests. As independent
companies, its bottling partners, some of whom are publicly traded
companies, make their own business decisions that may not
always be in line with the company’s interests. In addition, many
of its bottling partners have the right to manufacture or 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, may be detrimental
to Coca-Cola. These bottlers may devote more resources to
business opportunities or products other than those beneficial for
Coca-Cola. Such actions could, in the 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 bottling partners could indirectly affect Coca-Cola’s
business results. Such dependence on third parties is a weak link
in Coca-Cola’s operations and increases the company’s business
risks.
  SLIGGISH GROWTH OF CARBONATED BEVERAGES :

US consumers have started to look for greater variety in their

drinks and are becoming increasingly health conscious. This has
led to a decrease in the consumption of carbonated and other
sweetened beverages in the US. The US carbonated soft drinks
market generated total 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 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 $62.9
billion by the end of 2010.

More over in the recent years, beverage companies such as Coca-

Cola have been criticized for selling carbonated beverages with
high amounts of sugar and unacceptable levels of dangerous
chemical content, and have been implicated for facilitating poor
diet and increasing childhood obesity. Moreover, the US is the
company’s core market. Coca-Cola already expects its
performance in the region to be sluggish during 2007. Coca-Cola’s
revenues 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 close down its operation by a socialist
government in the drive for self - sufficiency. After 16 years of
absence, coca cola returned to India and witnessed a different
culture and economic platform. During their absence, Parle
brothers introduced a new type of cola called THUMBS UP. Along
with, they also formulated a lemon flavored drink, LIMCA, and
mango flavored, MAAZA. In 1993, coca cola bought the whole
Parle Brother operation, in a hope to beat the main competitor
(Pepsi). They presumed that with the tried and tested products of
Parle they will be able to regain their throne in the Indian soft
drink market. Pepsi having a 6-year head start helped revive the
demand for global cola but it was not easy for the soft drink giant
(coca cola) to return to India. Pepsi put more focus on the youth of
the country in their advertisements but coca cola tried influencing
Indians with the ‘American’ way of life, which turned out to be a
mistake.

Coca-Cola invested heavily in India for the first five years, which
got them credit of being one of the biggest investor in the country;
however, their sales figures were not so impressive. Hence, they
had to re-think their market strategies. Coca-Cola learned from
Hindustan Lever that reducing their will result in more turnover,
hence leading to profit. They launched an extensive market
research in India. They ascertained that in India 3 As must be
applied; Affordability, Availability and Acceptability. Coca-Cola
learnt that they were competing with local drinks such as “Nimbu
Pani”, “Narial Pani”, “Lassi” etc. and reached to a conclusion that
competitive pricing was unavoidable. Since then they introduced a
200 ml glass bottle for Rs.5.

Further, they had different advertising campaigns for different

regions of the country. In the southern 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 food products. 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. 60% in Carbonated Soft - drink
Segment, 36% in Fruit drinks Segment, 33% in Packaged water
Segment, compared to its arch rival, Pepsi. Diversifying their
product range and having a competitive pricing policy, they have
regained their throne. With virtually all the goods and services
required to produce and market Coca-Cola being made in India,
the business system of the Company directly employs
approximately 6,000 people, and indirectly creates employment
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, with another 25 being owned by
franchisees. That apart, a network of 21 contract packers
manufactures a range of products for the Company.

On the distribution front, 10-tonne trucks – open bay three-

wheelers that can navigate the narrow alleyways of Indian cities –
constantly keep our brands available in every nook and corner 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 necessitated its departure. Coca-Cola made
its return to the country in 1993 and made significant investments
to ensure that the beverage is available to more and more people,
even in remote and inaccessible parts of the nation.

Over the past fourteen years has enthralled consumers in India by

connecting with passions of India – Cricket, movies, music & food.
Coca-Cola’s advertising campaigns “Jo Chaho Ho Jaye” & “Life
Ho Toh Aise” were very popular & had entered youth vocabulary.
In 2002.Coca-Cola launched its iconic campaign “Thanda Matlab
Coca-Cola” which sky rocketed the brand to make it India’s
favorite soft drink brand.

GLASS PET CAN

FOUNTAIN
200ml, 500ml, 1.5L, 330 ml VARIOUS
300ml, 2L, 2.25L, SIZES
500ml, 500ml,
1000ml 100ml

Table - 1.0
 LIMCA :-

Limca was introduced in 1971 in India. Limca has remained

unchallenged as the No.1 sparkling drink in the cloudy lemon
segment. The success formula is the sharp fizz and lemon 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 the original thirst
choice of millions of customers for over 3 decades.

GLASS PET CAN

FOUNTAIN
200ml, 500ml, 1.5L, 330 ml VARIOUS
300ml, 2L, 2.25L, SIZES
500ml, 500ml,
1000ml 100ml

Table - 1.1

THUMBS UP :-

Thumbs up is a leading sparkling soft drink and most trusted

brand in India. Originally introduced in 1977, Thumbs up was
acquires by The Coca-Cola Company in 1993. Thumbs up 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.

GLASS PET CAN

FOUNTAIN
200ml, 500ml, 1.5L, 330 ml VARIOUS
300ml, 2L, 2.25L, SIZES
500ml, 500ml,
1000ml 100ml

SPRITE :-

Sprite a global leader in the lemon lime category is the second

largest sparkling beverage brand in India. Launched in 1999,
Sprite with its cut-thru perspective has managed to be a true teen
icon.

RGB PET CAN

FOUNTAIN
200ml, 500ml, 330 ml VARIOUS
300ml 600ml, 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 market place and is identifies as “The
Fun Catalyst”. Perceived as a fun youth brand, Fanta stands for its
vibrant color, tempting taste and tingling bubbles that not just
uplifts feelings but also helps free spirit thus encouraging one to
indulge in the moment. This positive imagery is associated with
happy, cheerful and special times with friends.

GLASS PET CAN

FOUNTAIN
200ml, 500ml, 1.5L, 330 ml VARIOUS
300ml 2L, 2.25L, SIZES
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 Food Corporation developed orange juice
powder. The company developed a process that eliminated 80% of
the water in the orange juice, forming a frozen concentrate that
when reconstitute created orange juice. They branded it Minute
Maid a name connoting the convenience and the ease of
preparation. Minute Maid thus moved from a powdered
concentrate 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 further extend the leadership of Coca-Cola in
India in the juice drink category.

Available in 3 PET pack sizes i.e. 400ml, 1 liter, 1.25 liters.

MAAZA:-

Maaza was introduced in late 1970’s. Maaza has today come to

symbolize the very spirit of mangoes. Universally loved for its
taste, color, thickness and wholesome properties, Maaza is the
mango lover’s first choice.

RGB PET POCKET

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

Table – 1.5
 KINLEY :-

The importance of water can never be understated, particularly in

a nation such as India where water governs the lives of the
millions, be it as a part of everyday ritual or as the monsoon which
gives life to the sub-continent. Kinley water comes with the
assurance of safety 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 coffee beverages is the perfect solution for office
and restaurant needs. Today Georgia coffee is available at Quick-
Service Restaurants, Airports, Cinemas and in Corporates across
all major metros in India.

HOT Espresso, Americano, Cappuccino,

BEVERAGES Caffe Latte, Mochaccino, Hot
Chocolate, Cardamom Tea.
COLD Ice Teas, Cold Coffee.
BEVERAGES

Table – 1.6
Marketing Mix of Coca – Cola India :

 PRODUCT :-

Coca-Cola India has a wide range of products in its product line i.e.
Coca-Cola, Fanta, Sprite, Thumbs Up, Maaza, Minute Maid and
Georgia Gold. Bottled water was another area where Coca-Cola
identified major opportunities. In 2002, Packaged drinking water in
India was a Rs. 1,000 crore industry and growing by 40% every
year. PDW was a low margin – high volume business, 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’s Aquafina. The product not only faced
intense competition but also was difficult to differentiate. Coke
positioned Kinley as natural water with the tag line “Boond
Boond Mein Vishwas” (Trust in each drop of water).

In early 1999, the parent company acquired Cadbury Schweppes.

As a result, 12 more bottlers were brought into CCI’s fold. This
acquisition added Crush, Canada Dry and Sport Cola to CCI’s
product line. This meant CCI had three oranges, clear lime and
cola drinks each in its portfolio.

 PRICE :-

Coke learnt with experience that price was a strategic weapon in

an emerging market like India. An increase in value added tax in
1996 had taken the price of the 300ml bottle beyond the reach of
many Indian customers. In 2000, CCI conducted a yearlong
experiment in coastal 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. 5 was rolled out countrywide in January 2003. The advertising
Campaign highlighted the affordability and Indian image.

To make it affordable, Coke introduced Kinley in 200ml pouches

for Re. 1 in selected places in Ahmadabad and 200ml water cups
in Maharashtra, priced at Rs. 3 per cup in testing marketing
exercise conducted in mid – 2002. In 2002 Kinley with 35% market
share had become the leader in the retail PDW segment and was
contributing 20% of CCI’s revenues.

 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 to leverage the
local capabilities. CCI's operations had been divided into North,
Central and Southern regions. Each region had a president at the
top, with divisions comprising marketing, finance, human
resources and bottling operations. The heads of the divisions
reported to the CEO. Bottling operations were divided into four
companies directed by the bottling head from headquarters. Under
the new plan, CCI shifted to a six region profit center set up where
product customization and packaging, marketing and brand
building were taken up locally. A Regional General Manager (RGM)
headed each region with the regional functional heads reporting to
him. All the RGMs reported to VP (Operations, who in turn reported
to CEO. The four bottling operations, with 37 bottling plants, were
merged into Hindustan Coca-Cola Beverages (HCCB). Each of the
six regions had on an average six bottling plants. Each plant was
headed by an Area General Manager (AGM) and held profit center
responsibility for a business territory. He reported to the RGM as
well as the head of bottling at the headquarters.

 PROMOTION :-

In the initial years, CCI focused on establishing the Coca-Cola

brand quickly. The marketing campaign positioned Coca-Cola as
an international brand and did not emphasize local association.
Coke, as a deliberate strategy, decided not to spend heavily on
promoting Thumbs Up. Indeed, the marketing spend on Thumbs
Up between 1993 and 1996 was almost negligible. The overall
marketing effort was also not focused as CCI changed the head of
marketing three times during the period. Thumps Up remained
neglected. Inadequate marketing support for other Parle brands
also led to their declining market shares.

The bottlers taken over by Coke also had problems adjusting to a

new work culture. They argued that CCI's lack of interest in
promoting Thumps Up was resulting in falling sales and asked CCI
to take corrective action.
Coke is primarily targeted at young individuals over the age of
twenty-five. This can be seen by Coca-Colas advertising
campaigns, which are aimed towards the young, by featuring well
known personalities popular to this age group. During 90'ies
Coke's promotion efforts did not seem to be effective. They were
focused on mega events like the 1996 Cricket World Cup held in
India. CCI's World Cup Cricket campaign was overshadowed by
Pepsi's "Nothing official about it" campaign. Major analysts were
surprised that Thumps Up was totally out of the picture during
such a mega event. In 1998 localization of marketing efforts, CCI
signed up celebrities like Aamir Khan, Aishwarya Rai, and Sunil
Gavaskar to promote Coke. Coke also began efforts to rejuvenate
the Parle brands, Limca and Thumps Up. In 1998, India was
declared the fastest growing market within the Coca-Cola system.
But things were far from normal. Attempts at building growth
through discounts and PET take home segment were not very
successful because of lack of coordination between the launches
and marketing back-up.

To maintain good relationships with bottlers and avoid defections

to the other camp, dealers had been pampered by offering
expensive overseas trips. In 2000, Coke wrote off investments in
India, amounting to $400 Million. The revised value of CCI's assets
after the charge was $300 Million.
CCI spent $3.5 Million to beef up advertising and distribution for
Thumps Up. By 2002, it had become India's No.2 cola drink after
Pepsi. Maaza, the mango drink, was repositioned as a juice brand
and saw a growth of almost 30% in 2001. Since India was a large
country of different tastes and cultures, CCI customized its
marketing strategy for different regions. It promoted the Coke
brand in Delhi, Thumps Up in Mumbai and Andhra Pradesh, and
Fanta in Tamil Nadu. Coke had plans to launch Rimzim, a spicy
soda drink in North Maharashtra.

Pestel Analysis Of Coca – Cola India :

PESTLE stands for Political, Economic, Social, Technological, Legal

and Environmental. It is a tool that helps the organizations for
making strategies and to know the EXTERNAL environment in
which the organization is working and is going to work in the
future.

Political Factors :

 Historical

Coca Cola India was the leading soft drink brand in India till 1977
when it left rather than revealing its formula to the government.
They re-entered the country in 1993. However, the primary barrier
for Coca-Cola’s entry into the Indian market was its political
environment. Despite the liberalization of the Indian economy in
1991 and introduction of the New Industrial Policy to eliminate
barriers such as bureaucracy and regulation, there was still a lot of
protectionism. India’s past promotion of “Indigenous availability”
or “Swadeshi movement” depicted its affinity for local products.
Due to India’s suspicion of foreign business entering Indian
markets, Coca Cola received alien status its re-entry. This and
some of the policies imposed on foreign enterprises proved as a
hindrance to the growth of the company in the country. To make
things worse, the policies were neither clear nor unchanging.

For example, foreign businesses were not allowed to market their

products under the same name if selling within the Indian market.
Thus, Coca Cola had to be changed to Coca Cola India (and Pepsi
had to be renamed to Lehar Pepsi). However, the most
controversial, and by far, the most damaging was when Coca-Cola
was forced to sign an agreement to sell 49% of its equity in order
to buy out Indian bottlers. Due to the lack of consistency in the
legal aspects, more importance was being given to lobbying the
politicians.

 Recent Scenario

During recent times, Coca Cola India has faced its fair share of
problems. On August 5th 2003, The Centre for Science and
Environment (CSE), an activist group in India focused on
environmental sustainability issues (specifically the effects of
industrialization and economic growth) issued a press release
stating: "12 major cold drink brands sold in and around Delhi
contain a deadly cocktail of pesticide residues". According to tests
conducted by the Pollution Monitoring Laboratory (PML) of the CSE
from April to August, three samples of twelve PepsiCo and Coca-
Cola brands from across the city were found to contain pesticide
residues surpassing global standards by 30-36 times.
This had an adverse impact on the sales of Coca Cola, with a drop
of almost 30-40%1 in only two weeks on the heels of a 75% five-
year growth trajectory. Many leading clubs, retailers, restaurants,
and college campuses across the country had stopped selling
Coca-Cola. This threatened the newly achieved leadership attained
over Pepsi due to a successful marketing campaign.
But this was not the end of Coca Cola’s troubles. There was
widespread discontent around many of their plants. For example,
in Plachimada, Kerala, the communities in and around the Coca
Cola plant blamed the factory for their water problems. Due to
this, the local Panchayat decided not to renew the license issued
to Coca Cola to “protect public interest". The company has also
been accused of illegally occupying a portion of the village
property resources in Mehdiganj, near Varanasi. However, there
are certain positives as well, with a 22 percent increase in its unit
case volume last quarter.
Economic Analysis :

The Indian economy sustained the global economic slowdown in

the previous year and has shown a tremendous economic growth.
It showed 8.6% of growth in the last quarter of 2009-10 as
compared to 5.8% same time in the previous year. It has emerged
as an attractive economy to invest in as many opportunities has
been recognized.

 Economic growth
India is ranked second in economic growth, just behind China.
Analysts have said that India will be the third biggest economy of
the world in the coming year behind China and USA. With
economic growth many opportunities have been seen, which have
attracted many foreign investors to the company.

Coca cola India returned to the country in 1993, despite few

problems in the start they have emerged as the king of soft drink
industry in India. The strong economic growth of India has resulted
in coca cola to invest heavily in sales and distributive channels. It
has introduced two new products, Nimbu Fresh and an energy
drink ‘Burn’.

Coca cola registered 22% growth in their unit case volume in the
second quarter (April-June). It is the 16 th consecutive quarter of
such growth out of which 13 are double digit. Coca cola India’s
growth is in contrast to its overall performance, the beverage king
reported a growth of just 5% (worldwide) in the same quarter.

 Inflationary effects
Inflation is one of the main problems that Indian economy has
been facing for a year now. Rising prices in the food and other
products doesn’t only effect the consumers it also has an adverse
effect on a company. The inflation rate for the year 2009 was
recorded to be 11.49%. As prices have gone up in India for various
products, especially oil, there has been uncertainty in decision
making of almost every company. Coca cola India has also been
affected by the same; it has been forced to think about their input
costs, as they have been rising due to inflation. Their expenditure
has been rising, with more costs in salaries, distribution channels
and other operating costs. Beverage industry being price
competitive market, they have not revised their product prices.

Exchange rate :
The exchange rate of rupee to US Dollar has been stable but in the
previous months the rate has had a tumultuous period. Exchange
rate determines at what price will the company export its products
and import whatever is required by it. The previous year, the rate
of rupee to USD touched 44, on an average it has been around 47,
so the exports earned less and the imports cost more. Therefore,
coca cola India had to bear some low profitable times. However, in
the present scenario rates have reached a stable level and exports
are on an increasing trend.

Social Analysis :
Coca- Cola returned to India in 1993 after a 16 - year hiatus,
amidst competition from Leher Pepsi which had the advantage of
entering the country 7 years earlier. Initially, it struggled to find
acceptance as there were already other brands such as Parle’s
Thumbs Up which existed in the market. Coca-Cola had earlier
focused more on the American way of life in their advertising
campaigns, which the Indian consumers could not identify with.
Also, they did not focus on competition from other alternatives
such as lemonade, Lassi etc.

These products had been around for centuries, and were also
cheaper alternatives to Coca-Cola. However, things were brought
under control when Thumbs Up was bought over by Coca Cola,
and more attention was paid by the company on their marketing
mix.
With the lowering of their prices by almost 15-20%, introduction of
newer products which appealed to the Indian tastes, more
investment in market research and focusing on the target group of
18-24 year olds, they were able to increase their market share and
build brand loyalty.

Coca Cola today, has made significant investments to build its

business in India. It has also generated employment for almost
1,25,000 people in related industry through its procurement,
supply and distribution cycles.

The soft drink industry today is growing steadily due to the

booming economy, strengthened middle class and low per capita
consumption. With the increase in health consciousness among
the urban consumers, the company has introduced newer
products such as Diet Coke, which contain lesser calories than
ordinary Coca Cola. This is also responsible for the company
shifting focus from carbonated drinks to Fruit Drinks / Juices and
bottled water.
The rural market had also been identified by Coca-Cola India as an
attractive target, with almost 70% of the country’s population. The
company has recorded significant growth in recent years

Coca Cola India has also taken many initiatives as a responsible

corporate citizen, by tying up with many NGOs such as BAIF (or
Bhartiya Agro Industries Foundation), SOS Children’s Villages and
Save the Children. It has also taken initiatives to promote
education in rural areas.

Technological Analysis :
Coca-Cola has started operations of its R&D facility in India, with
the view of localizing its product portfolio. The major focus would
be on non - carbonated drinks and flavors. The company’s R&D
team has already rolled out drinks such as Maaza aam panna and
also a Maaza mango milk drink, and is exploring options to enter
new categories in India such as juices in localized flavors, energy
drinks, sports drinks and flavored water. These initiatives are
being taken by the company to further expand their product
portfolio.
With the increasing importance of 360 - degree media tools and
overall ad spend on social media sets likely to grow by almost
44%, Coca-Cola has increased ad spend on the internet. Case in
point is the recent 2009 Sprite campaign, which was first launched
on the internet.

Environmental Analysis :

Coca Cola has earned a title of environment friendly company and

Coca Cola India too has followed in the footsteps. Coca Cola India’s
Corporate Social Responsibility (CSR), is an initiative that
prioritizes many social and environmental issues; one of them
being ‘water conservation’. They support many communities
based rainwater harvesting projects and help lending conservation
education.

The company has made sure that the following ideas are
considered during their operations:

1. Environmental due diligence before acquiring land

2. Environmental impact assessment before commencing project

3. Ground water and environment survey before selecting the

site

4. Ban on purchasing CFC emitting refrigerating equipment

5. Waste water treatment facilities

6. Compliance with all regulatory environmental requirements

 7. Energy conservation programs

By following these guidelines Coca-Cola India has helped the

environment with consistent profits and success. They seek to
provide leadership in three different areas, these are as follows:

1. Water efficiency and water quality

2. Energy efficiency

3. Eliminating or minimizing solid waste.

Though being an environmental friendly company, Coca Cola India
had to face its share of controversies. On 4th February, 2003,
Centre of Science and Environment in India, released a report
based on experiment done by Pollution Monitoring Laboratory. In
the experiment, they tested 17 packaged drinking water brands
and found that, Coca Cola’s Kinley has 15 times more pesticide
residual levels than the stipulated norms, Bisleri had 59 times and
Aquaplus had 109 times.

The main law governing the food safety is the 1954 Prevention of
food alteration act, which stated that pesticides should not be
present in any food item but did not have law against pesticides
being present in soft drinks. However, the Food Processing Order
1955 stated that the main ingredient used in soft drinks must be
‘potable water’ but the Bureau of Indian Standards had no
prescribed standards for pesticides in water.

But later it was found that BIS had stated that pesticides should
not be present or it should not exceed 0.001 part per million.
Further, the health ministry of India admitted that ‘there were
lapses in PFA regarding carbonated drinks’.

Fig 2.2 GRAPH OF PESTICIDES IN SOFT DRINKS IN INDIA

Legal Analysis:
As the Indian consumer is getting more educated, the government
is also paying special attention to consumer laws. In the past,
there were not so many laws protecting the benefits to the
consumer but now every business has to go by the law and fix
their operations, strategies so as to satisfy their consumers, and
employees. Keeping in mind the consumer laws, employment
laws, antitrust law, discrimination laws etc. a business should plan
out everything.

 Consumer Laws
In the present scenario, consumer is the king, if a product is
defective, not meeting the stated standards a consumer can
complain against the manufacturer. Complaining and getting the
verdict the court has made very fast and efficient as government
of India has installed new consumers’ courts. Their main job is to
see that the consumer benefits are being met or not. When
producing their beverages, Coca Cola India has to make sure that
they have written price, manufacturing date, expiry date, batch
no, nutritional facts are written on the packed product.

 Employment Laws

Ministry of Labor makes the laws for proper employment in the

country. They have stipulated norms on employing people from
the country and getting expatriates in the company as well. India
has strict laws against employing child labor. Being a male
dominated society, the ministry has made sure that female
employees are treated with respect and given equal importance at
the work place. Every field of work has got its own wage, these are
to meet the norms and laws set by the labor ministry. When
employing anyone, coca cola India cannot discriminate on social,
regional or any racists’ basis. If it is found that the company has
been violating the law, it has to face strict action and fines.

 Health and safety laws

As coca cola produces a product that is consumed by the
consumer as a food item, there are laws that the company must
abide by when producing it. Ministry of Food Processing Industries
makes and oversees the laws and norms for the food processing
industries.
The Indian Parliament has recently passed the Food Safety and
Standards Act, 2006 that overrides all other food related laws.

It will specifically repeal eight laws:

 The Prevention of Food Adulteration Act, 1954.

 The Fruit Products Order, 1955.
 The Meat Food Products Order, 1973.
 The Vegetable Oil Products (Control) Order, 1947.
 The Edible Oils Packaging (Regulation) Order, 1998.
 The Solvent Extracted Oil, De oiled Meal, and Edible Flour
(Control) Order, 1967.
 The Milk and Milk Products Order, 1992.
 Essential Commodities Act, 1955 relating to food.
From now on, the act establishes a regulatory body, the Food
Safety and Standards Authority of India. Anything that coca cola
makes, have to make accordingly to the laws. They have to check
the weight, volume and ingredients of the product. The export or
the import of the products by the company has to meet the quality
standards stipulated by the law.

 Anti-trust law
The Competition Commission of India was made under the Indian
Competition Act 2002, Monopolies Restrictive and Trade Practices
Act 1969 was replaced by it. This committee looks after all the
issues regarding unethical means of doing business, competition
issues and any dispute between two different business entities.
CLG competition and anti - trust practices are as follows:

 Representing clients before the MRTP Commission in

‘monopolistic and restrictive trade practices’ and ‘unfair trade
practices’ matters.
 Legal Advice and sophisticated insight into the international
best practices on competition law.
 Consultancy services on specific issues - supply and
distribution, pricing and marketing, ‘promotional materials’,
mergers, acquisitions, amalgamation, licensing, joint
operation and research, joint buying, ‘dominant-firm’ status
etc.
 Competition Audit and Due Diligence for developing
appropriate guidelines for employees, distributors, agents,
franchisees etc.
 Legal Due Diligence on anti-competition, unfair and
restrictive market practices.
 Drafting claims, counter-claims, replies, rejoinders,
representations etc. on Competition Law and related legal
issues.
 Strategic policing on anti-competition market practices and
trends.
 Policy due diligence for mergers, acquisitions, joint ventures
with appropriate anti-trust safeguard measures and policy.
All these laws help Coca Cola India to maintain its own brand and
values. Any other business trying to copy the brand of coca cola
will face the strict action against itself. These laws help every
business to compete in a fair environment. As it is known that the
coca cola and Pepsi are the fiercest rivals in the beverage
industry, the CCI makes sure that either of them does not indulge
in unfair means to make profits and hurt each other’s business.

SWOT Analysis of Coca – Cola in India :

STRENGTHES :

 DISTRIBUTION NETWORK

The Company has a strong and reliable distribution network. The

network is formed on the basis of the time of consumption and the
amount of sale yielded by a particular customer in one
transaction. It has a distribution network consisting of a number of
efficient salesmen, 700,000 retail outlets and 8000 distributors.
The distribution fleet includes different modes of distribution, from
10 ton to open bay three wheelers that can navigate the narrow
alleyways of Indian cities – constantly keep Coca-Cola brands
available in every nook and corner of the Country’s remotest
areas.

 STRONG BRAND IMAGE

Coke has its history of about more than a century and this
prolonged sustenance has definitely added to the brand image in
the minds of the consumers and to its wallet. The products
produced and marketed by Coca-Cola India have a strong brand
image.
Strong brand names like Coca-Cola, Fanta, Thumbs up, Limca and
Maaza add up to the brand name of Coca-Cola Company as a
whole. Coca Cola India for the first time has come out with
corporate campaign in India targeting its stakeholders. The
multimedia campaign “Little Drops of Joy " is aimed at raising the
corporate brand image of the company which took a heavy
beating with a number of controversies it faced in different
domains.
The new campaign is a part of a complete restructuring exercise in
the Indian arm of this global change. Coca Cola recently
announced its new corporate strategy called the “5 Pillar"
strategy. The company has identified the 5 pillars as
 People.
 Planet.
 Portfolio.
 Partners.
 Performance.

 LOW COST OF OPERATIONS

In light of the company’s Affordability Strategy, Coca-Cola went

about bringing a cost-focus culture in the company. This included
procurement Efficiencies – through focus on key input materials,
trade discipline and control and proactive tax management
through tax incentives, excise duty reduction and creating
marketing companies. These measures have reduced the costs of
operations and increased profit margins.
WEAKNESSES :
 HEALTH CARE ISSUES
In India, there exists a major controversy concerning pesticides
and other harmful chemicals in bottled products including Coca-
Cola. In 2003, the Centre for Science and Environment (CSE), a
non- governmental organization in New Delhi, said aerated waters
produced by soft drinks manufacturers in India, including
multinational giants PepsiCo and Coca-Cola, contained toxins
including lindane, DDT, malathion and chlorpyrifos - pesticides
that can contribute to cancer and a breakdown of the immune
system.

 SMALL SCALE SECTOR RESERVATIONS

The Company’s operations are carried out on a small scale and
due to Government restrictions and ‘red-tapism’, the Company
finds it very difficult to invest in technological advancements and
achieve economies of scale.

OPPORTUNITIES :

 LARGE DOMESTIC MARKETS

The domestic market for the products of the Company is very high
as compared to any other soft drink manufacturer. Coca-Cola India
claims a 58 per cent share of the soft drinks market; this includes
a 42 per cent share of the cola market.

Other products account for 16 per cent market share, chiefly led
by Limca. The company appointed 50,000 new outlets in the first
two months of this year, as part of its plans to cover one lakh
outlets for the coming summer season and this also covered 3,500
new villages. In Bangalore, Coca-Cola amounts for 74% of the
beverage market.

 EXPORT POTENTIAL

The Company can come up with new products which are not
manufactured abroad, like Maaza, etc and export them to foreign
nations. It can come up with strategies to eliminate apprehension
from the minds of the people towards the Coke products produced
in India so that there will be a considerable amount of exports and
it is yet another opportunity to broaden future prospects and cater
to the global markets rather than just domestic market.

 HIGHER INCOME AMONG PEOPLE

Development of India as a whole has led to an increase in the per
capita income thereby causing an increase in disposable income.
Unlike olden times, people now have the power of buying goods of
their choice without having to worry much about the flow of their
income. Coca-Cola Company can take advantage of such a
situation and enhance their sales.

THREATS :

 IMPORTS
As India is developing at a fast pace, the per capita income has
increased over the years and a majority of the people are
educated, the export levels have gone high. People understand
trade to a large extent and the demand for foreign goods has
increased over the years.
If consumers shift onto imported beverages rather than have
beverages manufactured within the country, it could pose a threat
to the Indian beverage industry as a whole in turn affecting the
sales of the Company.

 TAX & REGULATORY SECTOR

The tax system in India is accompanied by a variety of regulations
at each stage on the consequence from production to
consumption. When a license is issued, the production capacity is
mentioned on the license and every time the production capacity
needs to be increased, the license poses a problem. Renewing or
updating a license every now and then is difficult. Therefore, this
can limit the growth of the Company and pose problems.
  SLOWDOWN IN RURAL DEMAND
The rural market may be alluring but it is not without its problems:
Low per capita disposable incomes that is half the urban
disposable income; large number of daily wage earners, acute
dependence on the vagaries of the monsoon; seasonal
consumption linked to harvests and festivals and special
occasions; poor roads; power problems; and inaccessibility to
conventional advertising media. All these problems might lead to a
slowdown in the demand for the company’s products.
 Suggestions
The suggestions made in this section are based on the market
study conducted as part of “Coca-Cola India”. The suggestions are
arranged in order of priority, highest first.

 Perform a detail demand survey at regular interval to know

about the unique needs and requirements of the customer.

 The company should make hindrance free arrangement for

its customers/retailers to make any feedback or suggestions
as and when they feel.

 The company should focus to bring some more flavours like

health drinks and other low-calorie offerings. Coca-Cola India
can also introduce some fruit based drinks, as it has already
entered the energy drink arena with “Burn”.

 Coca-Cola’s distribution channel is mostly through retail.

Whereas the competitors also concentrate more on the
multiplexes, pubs and restaurants. Coca-Cola should try to
increase their distribution in these areas.
 The company must keep a watch on its primary competitors
in market in order to be able to compete with them.

 The company should use new attractive system of word of

mouth advertisement to keep alive the general awareness in
the whole market as a whole.

 The company should be always in a position to receive

continuous feedback and suggestions from its customers/
consumers as well as from the market and try to solve it
without any delay to establish its own good credibility.

 A strong watch should be kept on distributors so that the

goodwill of the BRAND doesn’t get affected.
 Conclusion
Though there were certain limitations in the study that was
conducted. The sample allowed for some conclusions to be drawn
on the basis of analysis that was done on the data collected.

The data has clearly indicated that Coca-Cola products are more
popular than the products of Pepsi mainly because of its TASTE,
BRAND NAME, INNOVATIVENESS and AVAILABILITY, thus it
should focus on good taste so that it can capture the major part
of the market. The study also indicated that the consumers are
satisfied with the Coca-Cola products and purchase them without
any specific occasions.

In today’s scenario, customer is the king because he has got

various choices around him. If you are not capable of providing
him the desired result he will definitely switch over to the other
provider. Therefore to survive in this cutthroat competition, you
need to be the best. Customer is no more loyal in today’s
scenario, so you need to be always on your toes.