This paper analyzes a major, U.S.-based corporation that produces one of the world's most popular products: Coca-Cola. An overview of the company's current market position is offered, combined with a SWOT. Two corporations, Pepsi and Cadbury-Schwepps, are identified as Coca-Cola's primary rivals. Declining demand for traditional colas is of greatest concern.
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Coca-Cola
Coca-Cola is one of the largest companies in the world. It employs 146, 200 employees worldwide and sells beverages in more than 200 countries. Coca-Cola has given its shareholders increasing dividends for 50 consecutive years (Coca-Cola company information, 2012, Coca-Cola). Coca-Cola's flagship brand is the soda Coca-Cola, and it dominates the traditional soda market. However, its main competitor Pepsi-Cola dominates many other facets of the bottled drink industry, such as Gatorade (versus Coke's PowerAde) and Mountain Dew (versus Coke's Mellow Yellow). Cadbury-Schweppes currently produces two other popular soda brands, Dr. Pepper and 7-UP. Coke's rival product Sprite has yet to secure equal market advantage. Cadbury-Schweppes also owns the Snapple line of beverages, some of which have a slightly 'healthier' image than that of much-demonized soda.
Strengths
Coke has international brand recognition. It is so synonymous with soda-drinking that in many regions and nations saying 'coke' a synonym for soda. It has a strong and loyal base of followers, which specifically choose Coke over Pepsi as a matter of personal pride. In the coveted developing world market, this is seen as a particular advantage, as consumers are more apt to choose a quintessentially American, iconic brand such as Coke over Pepsi.
Pepsi continues to see itself as an also-ran in the cola sweepstakes, no matter how much revenue it may garner. "The irony of Pepsi's success is that despite how far it has come out of the cola trenches, inside the company the primary competitive driver is still Coke. Ask any employee who the enemy is and the answer comes quick: 'Every one of them will say Coke'" (Brooker 2006).
Weaknesses
Coca-Cola is an extremely undiversified company, in contrast to its major rival Pepsi, which also sells food through its Frito-Lay brand and its more recently-acquired Quaker Oats line of foods. As demand for Coke rises and falls, so does the fate of the entire Coke enterprise. However, demand for soda has been shrinking. "Pepsi's carbonated beverages are not even the biggest generator of sales and earnings for the company. Pepsi's Frito-Lay brand of snack foods, which include Fritos, Doritos and Rold Gold, accounted for 61.2% of revenue and 65.3% of operating profits" (Brooker 2006).
Even if demand for soda falls off, Pepsi has many other brands, including some with 'healthier' images, which it can rely upon, such as its baked chips and sports beverages. "What Coke investors didn't envision was that an emerging preference for other soft beverages -- water, sports drinks -- would fracture demand. Nor did they...see that the business strengths that once applied to cola would take hold across a broadened soft-drink and snack-food market -- a market that Pepsi, and not Coke, dominated" (Brooker 2006). Pepsi, unlike Coke, has rebranded itself as a food company that also sells beverages. Cadbury-Schweppes is likewise highly diversified as a company. Its Cadbury division produces sweet snack foods, including its famous chocolates, which have a strong international following. Dr. Pepper has a strong, loyal regional consumer base, particularly in the American South. And regulations currently passed in some states attempting to curtail the sales of carbonated soft drinks, particularly to minors do not affect the Cadbury-Schweppes' flagship Snapple line of products.
Pepsi, Coca-Cola's chief rival, has adopted a non-cola focused approach that not only suits Pepsi's product profile, but reflects shifts in demand "Lifestyles have changed," stated PepsiCo's CEO, "And we have to modify our products" by focusing on water, juices, teas and sports drinks (D'Altorio 2012). Pepsi's top branded- Aquafina, Tropicana, Lipton, and Gatorade dominates the competition, versus Coca-Cola's competitor brands
Opportunities
Coca-Cola's domination in the beverage market was bolstered as Diet Coke was recently catapulted to the number two beverage in America. This was described as "a historic win for Coca-Cola in its decades-old rivalry with PepsiCo" (Berk 2011). Demand for Coke Zero, a diet beverage targeted specifically at males, is also increasing. Coke's dominance of the cola market is thus growing, including in the increasingly popular diet market, although the cola market as a whole is contracting. "Even though Diet Coke ascended to the No. 2 spot, the brand didn't grow last year. Its volume fell 1% and its market share remained stable at 9.9%" (Berk 2011). This suggests that Coke must continue to create diet cola beverages that draw consumer interest.
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