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Dominant market presence built on
strong brand portfolio
Strong bottling partnerships
Strong global footprint partnerships

Product quality issues and frequent

Increased environmental concerns
prompting consumers to buy
environment-friendly products

Regulations that affect sales at certain
points of sale


Dominant market presence built on strong brand portfolio

With revenue of $48,017 million Coca-Cola is one of the largest beverage manufacturers
globally. It is the largest provider of sparkling beverages, juices drinks and RTD(Ready to drink)
coffees. Moreover, Coca-Cola offers more than 3,500 products including diet and regular
sparkling beverages, and still beverages such as 100% juices, waters, sports and energy drinks,
and teas and coffees. The company alone accounts for more than 1.8 billion servings of all
beverages consumed worldwide every day.
Over the years, the company has made large investments in establishing a strong brand
portfolio. Consequently, Coca-Cola is one of the best recognized global brands. Furthermore,
Coca-Cola owns four of the worlds top five non-alcoholic sparkling beverage brands including
Coca-Cola, Diet Coke, Sprite and Fanta. Additionally, the companys portfolio includes 12 other
billion dollar brands: Coca- Cola Zero, Minute Maid, Minute Maid Pulpy, Dassani, Aquarius,
Powerade, Georgia, Simply, Glaceau Vitamin Water, Del Valle, I LOHAS and Ayataka. The
companys strong brand value facilitates customer recall and allows Coca-Cola to penetrate new
markets and consolidate its presence in the existing roles.

Strong bottling partnerships

While the company's brand success is attributable to its marketing efforts on one hand, on the
other, its strong customer and bottling partnerships equally attribute to the company's organic
growth. The company manufactures and sells concentrates, beverage bases and syrups to its
bottling operators, who, in turn, manufacture, package and distribute the final branded beverages
to various customers and consumers. Named as the Coca-Cola system, the company's bottling

partnership network allows it to produce differentiated beverages and packages that are
appropriate for the right channels and consumers.
Not to mention, Coca-Cola often acquires bottlers in various markets and utilizes its internal
resources and expertise to improve performance. By owning a controlling interest in bottlers
across various geographies, the company is able to compensate for limited local resources. The
company makes equity investments in selected bottling operations, which allow it to maximize
the strength and efficiency of its production, distribution and marketing capabilities around the
world. These investments also result in increases in unit case volume, net revenues and profits at
the bottler level, which, in turn, generate increased concentrate sales for the company's
concentrate and syrup business. This allows both Coca-Cola and its bottling partners to benefit
from long-term growth in volume, improved cash flows and increased shareowner value.
Furthermore, the company also provides expertise and resources to strengthen the business of its
bottling partners, where its investments in bottlers represent non-controlling interests. Through
its equity investment, the company helps its bottlers in improving their overall business
performance. This strong and empowered bottling network further allows the company to design
business models for sparkling and still beverages in specific markets and ensures a strong supply
chain network. The strong bottling network allows the company to gauge supply and demand
requirements with ease and further enables it to achieve scale and efficiencies in a quicker
Strong global footprint partnerships
Coca-Cola has a geographical footprint in more than 200 countries across the world. The
company has an established presence in relatively matured markets of North America and
Europe and is also an established name in emerging economies of Asia, which provide a huge
potential market compared to the developed regions. Coca-Cola's presence in several
geographical regions will ensure diversified revenue stream and reduces the business risk. It also
makes the company less vulnerable to the vagaries of a single economy. Broad geographical
presence helped the company to maintain its revenue growth amidst declining consumption of
carbonated soft drinks in the US.
Besides, Coca-Cola's effective participation in high growth emerging markets has been its
driver of growth in recent times. In FY2012, the unit case volumes increased 11% in Eurasia and
Africa, which consisted of 9% growth in sparkling beverages and 19% growth in still beverages.
India, Russia, and the Middle East and North Africa, key emerging markets for the company,
experienced 16%, 8% and 21% growth in unit case volumes, respectively. In comparison,
volumes increased by only 2% in North America, a key developed market for the company.
Additionally, the company is focused on investing more and expanding its business in
emerging economies including India, China and the Middle East towards new distribution
systems and marketing programs. In FY2011, the company committed to invest $2 billion in
India (over the next five years), $4 billion in China (over the next three years) $3 billion in
Russia (over the next five years) and $5 billion in the Middle East and North Africa (over the
next decade). Further, during FY2012, Coca-Cola announced plans to invest $300 million in

Vietnam from 2013 to 2015. The relatively lower consumption rates of Coca-Cola beverages in
these economies provide immense potential for growth. Thus, large geographical footprint in
diverse markets will enable the company to expand its markets to high growth economies, derive
the related synergies of expanded operations and also reduces the business risk.


Product quality issues and frequent recalls

Coca-Cola has been registering increasing instances of product recalls lately, which is
impacting consumer confidence in the brand. In August 2013, the company recalled 19,000 cases
of Minute Maid dairy drink in China due to their possible contamination with bacteria that can
cause botulism. In March 2013, Coca-Cola voluntarily recalled certain lots of Minute Maid
Orange Juice as the product could be subject to premature spoilage. In 2012, Coca-Cola Shanxi
Beverages, the company's Chinese subsidiary, admitted that some of its products were
contaminated by chlorine while doing a routine maintenance procedure. Although the company
recalled its products from that particular batch and also gave a public apology, consumers in
China expressed discontent over the issue. Earlier, in 2011, Coca-Cola removed cans and two
liter bottles of Coke Classic, Diet Coke and Cherry Coke from St. Louis area stores after
customers complained of a metallic taste in those products. In 2010, CCNA issued a voluntary
product recall for SmartWater PET Bottles as these beverages did not meet the US Food and
Drug Administration's quality standard for bottled water. Product recalls like these affect the
brand image of Coca-Cola and, in turn, impact consumer confidence in the company's products.

Increased environmental concerns prompting consumers to buy environmentfriendly products

Consumers of all fast-moving consumer goods (FMCG) products are increasingly demanding
products that cause the least impact on environment. As global concerns over the climate issue
are widening, consumers are proactively purchasing products with recycled, bio-degradable or
less amount of packaging. Changing consumer attitude towards environment protection is
prompting food and beverage manufacturers to respond with appropriate offerings. For example,
in FY2011, Coca-Cola introduced several of its beverage products in PlantBottle packaging,
which is made from up to 30% plant-based material and is a 100% recyclable bottle like PET
plastic. While serving its retail customers, the company uses GIVE IT BACK racks, which are
free-standing units, made of recyclable corrugated cardboard. Furthermore, approximately 85%
of the company's unit case volume is delivered in recyclable bottles and cans, and the company

targets to recover at least 50% of the equivalent bottles and cans sold worldwide. Furthermore, in
FY2012, the company, along with Ford Motor Company, H.J. Heinz Company, NIKE, and
Procter & Gamble formed the Plant PET Technology Collaborative (PTC). The PTC will work
towards accelerating the development and use of 100% plant-based PET materials and fiber in
their respective products. By taking initiatives that address the consumers' need for a safer and
healthier environment, Coca-Cola will be able to gain more consumer confidence. Additionally,
the company will be provided with opportunities to leverage cost savings from such initiatives
and reinvest in innovative technologies


Regulations that affect sales at certain points of sale

The company sells a range of beverage products that contain high amounts of sugars and
artificial sweeteners, which are not considered healthy for young children. Such products are
considered to be contributing to the growing prevalence of over-weightiness and obesity. As a
result, several of the company's products, including sparkling beverages come under the direct
purview of regulating authorities, which are concerned about the health and wellness of
consumers. According to industry estimates, more than 20 million children and teens in the US
are overweight or obese. The World Health Organization statistics reveal that globally more than
40 million children under the age of five were overweight in 2011. As knowledge of the impact
of obesity, especially in childhood, is becoming more prevalent, consumers, public health
officials and government officials are growing more concerned about the nutritional content of
foods and drinks consumed by children. In order to protect public health, governments of several
countries are taking measures to restrict junk food advertisements, especially those targeting
school children. In the recent times, emerging markets have followed suit. In 2012, authorities in
the Indian government proposed new guidelines for ensuring healthy food in school canteens.
Industry experts believe that this could mean a ban on soft drinks in school canteens in the
country. Furthermore, the government of Dubai issued guidelines banning the sale of chocolates,
crisps, soft drinks and chewing gum from every school canteen in order to encourage safe and
healthy eating among children.
While Coca-Cola expects to draw more sales from the emerging economies, such regulations,
especially affecting a large and potential consumer segment consisting of school children will
impact the company's growth in these regions. Although the company will still be allowed to sell
water and certain still beverages in schools, in future, possible new taxes on sugar-sweetened
beverages and additional governmental regulations concerning the marketing, labeling,
packaging or sale of Coca-Cola's beverages may reduce demand for the company's beverages,
which could affect its profitability.