The Coca-Cola Company (Coca-Cola) is a leading manufacturer, distributor and marketer of Non-alcoholic beverage concentrates and syrups, in the world. Coca-Cola has a strong brand name and brand portfolio. Business-Week and Interbrand, a branding consultancy, recognize Coca-Cola as one of the leading brands in their top 100 global brands ranking in 2006. The Business Week-Interbred 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 The Company’s strong brand value facilitates customer recall and allows Coca-Cola to penetrate markets. However, the company is threatened by intense competition which could have an adverse impact on the company’s market share. Strengths Weaknesses World’s leading brand Large scale of operations Robust revenue growth in three segment Negative publicity Sluggish performance in North America
Decline in cash from operating activities Opportunities Threats Acquisitions Intense competition Growing bottled water market Growing Hispanic population in US Intense competition Dependence on bottling partners Sluggish growth of carbonated beverages Strength of coca cola Coca-Cola has strong brand recognition across the globe. The company has a leading brand value and a strong brand portfolio. Business-Week and Interbrand, a branding consultancy, recognize. Coca-Cola as one of the leading brands in their top 100 global brands ranking in 2006.
The Business Week-Interbrand 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. Weaknesses Negative publicity The company received negative publicity in India during September 2006. The company was accused by the Center 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.
These pesticides included chemicals which could cause cancers, damage the nervous and reproductive systems and reduce bone mineral density. Such negative publicity could adversely impact the company’s brand image and the demand for Coca-Cola products. This could also have an adverse impact on the company’s growth prospects in the international markets Opportunities Acquisitions For the last one year, Coca-Cola has been aggressively adopting the inorganic growth path. 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 in Germany. 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. Threats Intense competition Coca-Cola competes in the nonalcoholic 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 nonalcoholic 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, Groupe 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